Renault and Nissan are likely to merge into one big company and reports on Bloomberg say that the two-decade-old alliance under a single stock as globally electric mobility and car sharing takes the center stage. Currently, Japanese Automaker, Nissan owns 15% stake in French firm Renault and Renault owns 43 percent of Nissan’s stakes. Both Renault and Nissan have been in an alliance since 1999 and Mitsubishi joined in 2016. The partnership between Renault-Nissan-Mitsubishi alliance overtook the sales of Volkswagen Group to become the world’s largest car company.
Currently, the top-management lead by Chairman Carlos Ghosn is considering options to end the current alliance between Renault and Nissan and merge them as one corporation. Carlos Ghosn is driving the negotiations and would run the combined entity further adds Bloomberg report. If successful, this merger would be a more formidable rival for Volkswagen AG and Toyota Motor Corp, allowing the partners, investors to better pool resources and company’s operating as a single unit with more skill and technology as the industry shifts toward new-energy vehicles, autonomous driving, and car-sharing services. The alliance between Renault and Nissan has already helped the companies to save costs by sharing platforms and engines.
“Size matters in the auto industry,” said Janet Lewis, an analyst at Macquarie in Tokyo. “The concern has always primarily been the French government, and somewhat Japan because both France and Japan like to keep their national champions.”
Current discussions suggest that a transaction in which Nissan would essentially give Renault shareholders stock in the new company, Sources said Bloomberg. Nissan shareholders would also receive shares in the new company in exchange for their holdings, they said. The automaker may maintain headquarters in both Japan and France.
With reports coming in, Renault shares jumped as much as 8.3 percent, hitting the highest intraday level in more than a decade. They were up 5.8 percent at the market close in Paris, giving the company a market value of about 29 billion euros ($36 billion). Nissan shares rose 0.5 percent as of 9:11 a.m. in Tokyo on Friday, giving the company a valuation of about 4.6 trillion yen ($44 billion).
However, with French government owning 15% stake in Renault would make it difficult for this deal to get through. French and Japanese governments would also need to approve this deal and with politics being involved the ease of this merger might not be that easy for Carlos Ghosn. Another possibility would be to base the company in London or the Netherlands, where cross-Atlantic carmaker Fiat Chrysler Automobiles NV has its corporate charter. Fiat Chrysler maintains headquarters in both Italy and the U.S.
The final decision on this merger may not come soon. The talks have been ongoing for several months and may not yield a result. A spokesman for the Renault-Nissan alliance said the group doesn’t comment on rumors and speculation, while a spokesman for the French finance ministry declined to comment. Representatives for Yokohama, Japan-based Nissan and Renault also declined to comment.
Earlier, media reports also confirmed that Nissan was in talks to buy a bulk of the French government’s stake in Renault. The Renault-Nissan alliance said at the time any discussion about a share transaction involving the parties was “pure speculation.”
Ghosn has pledged to cement Renault’s partnership with Nissan, saying in February that the companies would devise a plan to “make the alliance irreversible.” The 64-year-old relinquished the chief executive officer role at Nissan last year to focus on the partnership.
The companies are seeking to double synergies to 10 billion euros by 2022 from 2016. In April, Mitsubishi Motors Corp. — in which Nissan is the largest shareholder — will further integrate with the alliance by joining a shared parts-purchasing organization. The alliance forecasts unit sales of 14 million units by 2022, compared with 10.6 million last year. Volkswagen, the world’s largest carmaker, sold 10.7 million vehicles last year, while Toyota sold 10.4 million.
With Inputs from Bloomberg
