Renault/Nissan merger not seen imminent – sources
13 APR 2018
- Deal plans “shelved” for now after recent press reports – source
- Banks chasing mandates for possible deal
- State concerns remain an obstacle
A merger between Renault [EPA:RNO] and Nissan [TYO:7201] is not seen to be imminent, said two sources briefed on the matter.
A combination makes business sense for both companies, one of the sources said, but recent press reports on the deal are “exaggerated” and contain “more rumours than truth”. The second source said that those reports diminished the chance of a deal in the near future, perhaps “for a few years”, given the public reaction.
A combination makes business sense for both companies, one of the sources said, but recent press reports on the deal are “exaggerated” and contain “more rumours than truth”. The second source said that those reports diminished the chance of a deal in the near future, perhaps “for a few years”, given the public reaction.
Discussions on a merger have been held on and off for years, the sources said. Banks are now pitching for mandates for a potential deal, said a banker familiar with the state, who has worked on French privatisations in the past. The first source added that no formal mandates have yet been awarded.
On 7 March, Reuters reported that a merger was on the horizon, with Nissan in talks to buy the French state’s 15.1% stake in Renault as an opening move. Bloomberg reported on 29 March that Nissan and Renault were in merger talks. Renault already holds a 43.4% stake in Nissan, and Nissan holds 15% of Renault.
In the long run, France’s stake in Renault is the biggest obstacle to a deal, the first source said. A resolution of the French government’s concerns about its remaining stake in Renault “could take a year” before a formal process starts, the first source said.
On a merger between the automotive giants, the French government is likely concerned about the potential for job losses in France and the risk that a merger might affect Renault’s supply of vehicles to France’s military and public transport systems, said DLA Piper’s Noam Ankri, an independent M&A lawyer.
To address these concerns, the merging parties could allow France a “golden share” to give it a say on a number of strategic matters after the deal, Ankri said. As well, the merged entity could have its holding company in neutral territory or perhaps retain two headquarters, the first source and Ankri said.
To address these concerns, the merging parties could allow France a “golden share” to give it a say on a number of strategic matters after the deal, Ankri said. As well, the merged entity could have its holding company in neutral territory or perhaps retain two headquarters, the first source and Ankri said.
Renault and Nissan could reach a deal “quickly” once the question of French state ownership is resolved, the first source added.
A spokesperson for the French economy ministry told this news service that the government is reviewing its options for Renault. The government sold a 4.73% stake in Renault last year and, in January, announced plans to privatise a number of companies.
Renault declined to comment. Nissan did not respond to requests for comment.
A spokesperson for the French economy ministry told this news service that the government is reviewing its options for Renault. The government sold a 4.73% stake in Renault last year and, in January, announced plans to privatise a number of companies.
Renault declined to comment. Nissan did not respond to requests for comment.