Renault and Nissan agree to overhaul alliance with equal stakes and EV deal

They will each retain a 15% cross-shareholding, while Nissan will invest in the French car maker’s electric vehicle and software business Ampere

The pair came to an agreement on the rebalancing and key projects in principle last week. EPA
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Renault has agreed to lower its stake in Nissan Motor, addressing a long-standing source of friction in their two-decade alliance to better compete in an industry moving to electrification and automation.

The partners will each retain a 15 per cent cross-shareholding with Renault transferring the remainder of its stake into a French trust for a co-ordinated sale when it is commercially “reasonable” to do so, the companies said on Monday.

The plan still requires final approval from the companies’ respective boards.

Renault, Nissan and junior alliance partner Mitsubishi Motors also plan to move forward through collaborations on specific projects, including in India, South America and Europe.

Nissan will invest in Renault’s carved-out electric-vehicle and software business Ampere, which is set for a listing, with a goal of becoming a strategic shareholder.

The pair came to an agreement on the rebalancing and key projects in principle last week.

“A re-sized capital structure should help keep the alliance viable, maintaining synergies and opening up strategic opportunities on both sides,” Jefferies analyst Philippe Houchois said in a note.

“Renault resisted pressure to sell at current levels and is now in position to better allocate excess capital for growth and shareholders.”

Renault fell 0.7 per cent in early Paris trading, while Nissan pared earlier gains to fall slightly.

The two sides have been inching closer to a decision since early last year. A final agreement will address a power imbalance that’s long bothered executives in Japan.

Although Renault holds the larger stake at 43 per cent with voting rights, Nissan makes more cars while owning a 15 per cent stake in the French car maker with no voting rights.

The deal is crucial for Renault chief executive Luca de Meo to be able to move forward with his own strategy, involving a complex split in five different units, including Ampere.

The French maker of Megane E-Tech and Austral cars wants to deepen ties with several other partners, including China’s Zhejiang Geely Holding and chipmaker Qualcomm.

The deal follows months of tense negotiations. The talks risked collapsing late last year due to sticking points on intellectual property and disagreement over Ampere’s valuation, sources have said. Nissan’s independent directors endorsed proposals from Renault earlier this month, they said.

An event for the official announcement is tentatively planned for February 6 in London, according to sources.

Dating back to 1999, the alliance was set up when Renault rescued Nissan with a cash injection to form one of the biggest auto partnerships in the industry. Over the years, rivalries and mutual suspicion mounted, culminating in the downfall of former leader Carlos Ghosn.

Tensions also spilt over into Japanese-French politics when Renault contemplated merging the two companies, exacerbating resentment at Nissan.

Mounting electrification costs and rapid technological innovation mean Renault and Nissan can ill afford squandering some of the benefits deriving from the alliance, such as common purchases and car platforms.

Continued collaboration on various industrial projects was a crucial condition for Renault to obtain approval of the alliance rebalancing from the French government, its most powerful shareholder. Renault has reportedly proposed work on 10 common projects.

Updated: March 09, 2023, 11:37 AM