Nissan Doesn’t Let Renault Gain More Control
During the last two weeks, the markets have been watching how Fiat Chrysler (FCA) and Renault could merge after both companies admitted their intention to shake hands. However, the deal seems to have collapsed, and Renault now focuses on Nissan, which has a 20 years old alliance with the French carmaker.
The Japanese firm, which has already been hit by a crisis triggered by the arrest of former chairman Carlos Ghosn, doesn’t agree with Renault’s demand for more control.
Nissan Annoyed by Renault’s Dominance
Renault, which owns 43.4% of Nissan, demanded a greater influence in Japanese automaker’s new governance system. However, it was rejected on Monday by Nissan on concerns over conflict of interest. In response, the French giant hinted that it might block Nissan from creating an overhauled governance structure at the shareholder meeting planned for June 25, unless Renault obtained more representation on new committees of the Japanese company.
Renault Chairman Jean-Dominique Senard came with the demand in the form of a letter, which Nissan called regrettable. The Yokohama-based company said in a statement:
Nissan has received a letter from Renault indicating intention to abstain from voting.” “Nissan finds Renault's new stance on this matter most regrettable, as such a stance runs counter to the company’s efforts to improve its corporate governance.
The post reads.
People familiar with the matter told Reuters that Nissan wanted to urge Renault to cut its 43.4% stake in the Japanese firm. In exchange, Nissan would approve Renault’s deal with FCA, which recently collapsed but still has chances to revive.
Renault intends to abstain from the governance vote, which would block the new governance system. On the other side, Nissan said it would abstain from voting on the deal with FCA. Nonetheless, Renault doesn’t want to set back.
The company reportedly said:
Renault's rights as 43.4% shareholder of Nissan need to be fully recognized and, at a minimum, one or two directors proposed by Renault should be members of each of the three committees. As currently proposed, this does not seem to be the case.
France Ready to Help Renault-Nissan Alliance
France, which currently holds a 15% stake in Renault, is willing to support the alliance between the French carmaker and Nissan. Finance and Economy Minister Bruno Le Maire revealed that the country had a strategy to strengthen the relationship between the two firms.
What is at the heart of this strategy is the reinforcement of the alliance between Renault and Nissan.
Le Maire added:
Then we will see if consolidation is possible. We are all aware that there is a necessity for consolidation in the automotive industry and the proposal of a merger between Fiat and Renault was a very interesting one but as a second step – the first step must be the reinforcement of alliance between Renault and Nissan.
CNBC reached the Finance Minister in Fukuoka, Japan, where Le Maire attended a meeting between G20 finance minister. He said he had no plan to meet with Nissan during his visit in Japan, stressing that it was the Japanese firm’s management that should “pave the way for the reinforcement of the links between Renault and Nissan.”
The tension between Renault and Nissan intensified days after Fiat Chrysler gave up a $35 billion merger offer for the French carmaker, blaming political conditions in France as a key motive for the move.
When the deal recently collapsed, people familiar with the situation told CNBC that the negotiations had been hindered with the intervention of the French government.
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