Renault and Nissan near deal to reshape historic alliance

Renault and Nissan are close to reaching a deal that would reshape their troubled alliance, paving the way for the carmakers to deepen their co-operation in the era of electric vehicles.

Agreement is close on a key first step that would require Renault to cut its stake in Nissan, equalising the carmakers’ respective holdings in each other as well as their voting rights, according to people close to the talks.

The breakthrough comes after months of stalemate and follows a showdown between Nissan chief executive Makoto Uchida and the group’s non-executive directors, who demanded he take a tougher approach to negotiations over the future of the 23-year-old alliance.

Under the prospective deal, equalising the stakes would be combined with Nissan’s approval for Renault to carve out its legacy combustion engine business in partnership with China’s Geely and, potentially, with Saudi Aramco as investors, the people said. Renault is also set to spin off its electric vehicle business, which Nissan could invest in later down the line.

Luca de Meo and Jean-Dominique Senard, the chief executive and chair of Renault, are due to visit Japan next week in the hope that they can settle the last details with Nissan executives before an alliance board meeting on January 26 and a formal announcement in the early days of February, the people added. Some senior Nissan executives still view that timetable as optimistic, they added.

Renault chief executive Luca de Meo, left, and the group’s chair Jean-Dominique Senard are due to visit Japan next week © Nathan Laine/Bloomberg

“There are lots of details to finalise, but what was needed was the will to do this deal. That’s there now and there’s no way back,” one of the people said.

Nissan and Renault declined to comment.

Since its inception in 1999, when Renault saved Nissan from near-bankruptcy, the alliance has delivered cost savings and other synergies but also demanded constant navigation of rivalries and confrontation. The extent of those internal clashes were laid bare after the 2018 arrest and ousting of alliance supremo Carlos Ghosn.

Both companies, however, remain reliant on the tie-up in the face of the massive investment needs created by the arrival of electric cars and the shift to cleaner technology.

Under the restructured alliance, Renault would cut its Nissan stake to 15 per cent from 43 per cent, placing those shares — worth about €3.7bn at current market prices — in a trust that would sell them over time. Nissan, meanwhile, would recover the voting rights attached to its own stake in Renault.

Though Renault loses influence on paper, and will earn less from future Nissan dividend payouts, it has had little sway at the Japanese group in recent years, people close to the company have said. Renault is hoping instead to rebuild goodwill to push ahead with more joint operational projects.

A Nissan showroom in Tokyo
A Nissan car showroom in Tokyo. The alliance with Renault began in 1999 and has delivered cost savings and other synergies © Kazuhiro Nogi/AFP via Getty Images

Several hurdles to a reshaping of the deal have been cleared this month, helped by the French government giving assurances over its backing for an agreement, people close to the talks added. That followed several months of negotiations after Nissan expressed concerns over sharing its intellectual property rights with Geely.

Renault and Nissan have since reached an agreement over the issue of IP, which was one of the chief stumbling blocks of a wider deal, according to three people.

“There’s a complete backing from the French state. This will get done, the fundamentals have been ironed out and the issues are more administrative now,” said one French government official. The French state has a 15 per cent stake in Renault.

Earlier this week, a group of Nissan’s non-executive directors gave the green light to chief executive Uchida to pursue the deal, but insisted that any agreement on spinning off Renault’s combustion engine business would hinge on reaching an accord on the capital structure of the alliance.

People familiar with the discussions said the independent directors had been clear that Uchida should be wary of any French pledge to deal with the respective stakes at a future date and ensure it was agreed now.

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