Japan‘s Nissan Motor Co. and France‘s Renault SA reportedly nears a “historic” deal to reshape their long-standing auto alliance for about two decades now, Business Mirror reports citing a trusted source familiar with the matter.
Final negotiations
The two companies are now in the final negotiations to strengthen their partnership.
Renault seeks to cut its 43.7% stake to 15% in Nissan, while the Japanese automaker will fund Renault’s upcoming EV unit Ampere.
Notably, Renault’s stake reduction will match Nissan’s stake in their company.
The unnamed source noted that the partners aim to conclude the negotiations on January 2023 before disclosing the details to the public.
Why is the deal important?
Renault is apparently amid a complex division of its business into five distinct units while negotiating with the Japanese auto giant. Their uneven capital arrangements have caused conflict over time.
Notably, Renault expects Ampere to be valued at around €10 billion ($10.8 billion). Depending on the state of the market, it intends to launch an initial public offering in the second half of the year.
According to the source, Nissan must now determine how much money to invest in Renault’s EV unit and for how much, which will effectively define Ampere’s value.
Shiro Nagai, a representative for Nissan, chose not to respond.
Partnership issues
The two auto giants joined hands in 1999, but the partnership has been contentious in recent years.
That time, Renault aided Nissan through a cash injection. It even deployed its executive Carlos Ghosn to rescue the Japanese automaker from bankruptcy. However, Carlos Ghosn was accused of financial misconduct in 2018, straining the supposedly solid partnership.
Apart from that, the unequal share arrangements have also adversely affected the two major companies’ partnerships.
Renault retains merely 15% of Nissan without voting rights, owned by the French automaker to the sum of 43%.
Renewed partnership
Under the condition of anonymity, the source stated that the deal had received “the green light” from Nissan’s independent directors.
On January 26, there will be a meeting in Japan where the last-minute details should be worked out. The source said the signing would take place this week, and an announcement would follow the following week.
The Yomiuri Shimbun newspaper in Japan also stated the deal was nearing completion. However, a Nissan representative refused to respond on “speculation.” According to the Jiji news agency, the CEO of Renault will visit Japan this weekend.
Interestingly, analysts view this “rebalancing” deal as a move to develop trust between the two auto giants. Given Nissan’s current technologies and Renault’s superior access to the European market, there is also room for the companies to collaborate on electric vehicles.
