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Nissan, Renault agree to overhaul alliance, putting themselves on equal footing

2023-01-30T07:38:26Z

Nissan Motor Co (7201.T) and Renault SA (RENA.PA) agreed on Monday to a sweeping revamp of their two-decade-old automaking alliance that will put them on equal footing and see the Japanese company invest in Renault’s new electric vehicle business.

The announcement came after nearly four months of intense talks that sources told Reuters were complicated by concerns about the sharing of intellectual property as Renault sought to build a number of new tie-ups with companies outside their alliance.

Under the deal, which is still subject to board approvals, Renault will reduce its stake in Nissan to 15% from around 43%, transferring around 28% of the Japanese automaker to a French trust, Renault said.

Crucially, that will make the companies more equal partners. Their unequal relationship had long been a source of friction among Nissan executives. While Renault bailed out Nissan two decades ago, it is a far smaller automaker by sales.

Their alliance, which was also includes junior partner, Mitsubishi Motors Corp (7211.T), was deeply strained by the ouster of its architect, former Chairman Carlos Ghosn, amid financial scandal.

The pair will now have a 15% cross-shareholding that will allow Nissan to exercise its voting rights, which it was unable to do previously.

The cross-shareholding includes a lock-up that prevents shareholders from selling for a certain period, as well as a standstill obligation that limits how a shareholder can buy or sell a stock.

Renault plans to instruct the French trustee to sell the Nissan shares, worth around $4.1 billion at current market values, if commercially reasonable for Renault, in a coordinated and orderly process, it said.

Since the two automakers announced they were in negotiations to restructure their alliance in early October, shares in Renault have gained almost 25%, while Nissan shares, facing a potential stock overhang, are up just 3%.

As part of the deal, Nissan and Renault have pledged to pool more resources into key projects in Latin America, India and Europe, involving markets, vehicles and technologies. Nissan also said it would invest in Renault’s new battery-electric vehicle unit.

The future shape of the Franco-Japanese alliance has implications for both companies as well as the global auto industry. It also highlights how the immense technological upheaval in the auto industry is forcing companies to both partner and compete with a dizzying number of newcomers and tech firms.

Renault, for instance, has said it will partner with companies from China’s Geely Automobile Holdings (0175.HK) to semiconductor giant Qualcomm Inc (QCOM.O).

The French company is separately working to finalise a deal with Geely and to bring Saudi Arabian state oil producer Aramco (2222.SE) in as an investor and partner to develop gasoline engines and hybrid technologies, Reuters has reported.

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