Renault is reportedly considering offloading a chunk of its 43% stake in Japanese automaker, Nissan. Its stake of 1.83 billion shares is valued at approximately EUR 7.1 billion.
Renault and Nissan along with Mitsubishi (more recently) are part of an 'Alliance' founded on March 27, 1999. The 23-year-old alliance figured third in global auto sales in 2021, however, their relationship hasn't been the most ideal either. Things got further complicated with the arrest of then Alliance, Nissan, and Renault Chairman and CEO, Carlos Ghosn in Japan.
Renault is faced with a delicate situation as it aims to reduce its stake in Nissan while trying to rebalance the 'Alliance' without breaking it apart. Their lopsided cross-shareholding structure only gives Nissan a 15% stake with no voting rights in the French automaker; despite contributing the bulk in sales and revenue for the alliance.
The sale could help fund structural changes planned out by Renault CEO Luca de Meo in February. The company said it was considering a reorganizing during an earnings meeting recently.
Renault's cash flow had been significantly impacted after shutting down operations in Russia, which happens to be one of their most profitable markets; the impact of which is estimated at about EUR 2.2 billion.
The company is "studying to bring together efforts on 100% electric activities and technologies within a dedicated entity in France to accelerate growth," it said in a statement in February. "At the same time, Renault Group is also studying the opportunity to bring together its activities and technologies of ICE and hybrid engines and transmissions based outside of France within a dedicated entity."
The "sources" said that Renault's legacy business could join forces with a partner, an option being Zhejiang Geely Holding Group of China, which owns Volvo Cars. Renault and Geely recently partnered for South Korea and China.
Nissan could very well be one of the buyers of its own stock should Renault push through with the sale. The Japanese automaker is set to make bank after a couple of good years in the market and is liquid to the tune of JPY 2 trillion.
Nissan COO Ashwani Gupta is headed to Paris this week to discuss the matter with de Meo; this is ahead of a scheduled meeting next month where the alliance aims to refocus given the new global business challenges.