Nissan Motor Co Ltd shares fell 4% in early trading on Monday (25/4) following reports that its main shareholder Renault SA is considering selling part of its stake in Nissan.
Reported by Reuters on Monday (25/4), Renault’s plan is an attempt by the company to separate the electric vehicle (EV) business. It is the French company’s ambition to catch up with its rivals, Tesla and Volkswagen.
It is estimated that the planned sale of the shares could generate billions of euros after switching to the electric vehicle business. This plan at once as a way to ease long-standing tensions with alliance partners.
According to sources, Nissan may be willing to buy some of the 1.83 billion stake in the Japanese automaker owned by Renault. Renault may also seek other investors to acquire the shares. But spokeswomen for Renault and Nissan declined to comment.
Previously, Renault CEO Luca de Meo made a blueprint on the company’s business in February. One of them is related to the business separation plan and the IPO of a separate electric car entity.
The company will cooperate with Zhejiang Geely Holding Group Co. China, controller of Volvo Car AB. Renault reached a co-production deal with Geely earlier this year for a plant in South Korea, and the two said they would work together in China.
De Meo, made the long strides to transform Renault before Russia’s invasion of Ukraine, but forced the company to start exiting the second-largest market. As a result, the company incurs huge costs after leaving Russia.
The automaker said it would take a non-cash fee of 2.2 billion euros ($2.4 billion) from the value of its Russian assets, which include a factory in Moscow. From there, the company has the option to sell its shares to Russian automaker AvtoVaz or transfer its ownership to local investors.
Previously, there were negotiations to re-form the Renault-Nissan alliance which have not been discussed publicly but could take months. On the other hand, Renault has successfully developed the electric car business, which is included in Nissan’s assets.
Nissan will also be a partner in the French automaker’s legacy hybrid and combustion engine operations. Renault CFO Thierry Pieton said the two companies worked closely with each other on Renault’s structural overhaul. “Nissan is up front. This is definitely something we want to discuss with them,” he explained.
Nissan will be in a better position than last year to buy back its stake, if Renault decides to sell its stake. The Yokohama, Japan-based company has 2 trillion yen (US$15.6 billion) in cash and equivalents, and its fiscal year operating profit is on track for the first time since 2019.
Ashwani Gupta, Nissan’s chief operating officer, will travel to Paris next week for discussions with Renault CEO de Meo ahead of a broader meeting between Renault and Nissan executives in Tokyo next month.
Tensions around the asymmetric nature of corporate ties nearly shattered the alliance following the arrest of former Chairman Carlos Ghosn in Japan in 2018. Since then, automakers have focused on separate turnaround plans to get them through the damage wrought by Ghosn’s ouster and the impact of the pandemic.
The negotiations aim to rebalance the Franco-Japanese alliance, which also includes Mitsubishi Motors Corp., which was held in 2019 but takes a back seat on more pressing operational and management issues.
