Renault hires investment bank to put merger plan to Nissan
French carmaker meets strong resistance from Nissan chief and Japan government
Renault has hired one of Japan’s biggest investment banks to put a formal merger proposal to Nissan but has encountered strong resistance from both its chief executive Hiroto Saikawa and the Japanese government, said people involved in the talks.
Renault’s double snub comes as relations between the French carmaker and its alliance partner, Nissan sink to new lows, say people close to both companies. The new merger proposal, said one person familiar with the situation, had ignited resentments that date back to the era when the now ousted Nissan chairman, Carlos Ghosn, led the alliance.
Mr Ghosn had been guiding the alliance towards a merger but those talks were abruptly suspended last November when he was arrested on charges of financial misconduct.
Renault’s merger plan involves a 50-50 holding company structure that envisions an equal split between the board members appointed by Renault and Nissan.
While the French carmaker owns 43 per cent in Nissan, which has a 15 per cent stake in Renault, the merged entity would value the floating values of the two companies at the same price, according to three people with knowledge of the plan.
“This isn’t a hostile offer but an equal merger,” said one person working with the French carmaker. “Renault is making one concession after the other on this plan but the goodwill won’t last forever.”
Tensions within the alliance increased after Mr Saikawa told Renault chairman Jean-Dominique Senard and its chief executive Thierry Bolloré that Nissan was not yet interested in discussing a full merger when the topic was raised during a dinner in Paris in mid-April.
But people close to the situation said that the outcome of that dinner did not seem to have deterred Mr Bolloré, who has within recent weeks told members of Renault’s executive committee that he was directly involved in pushing merger talks further forward.
Several days after the dinner, one of Japan’s most senior investment bankers, acting on Renault’s behalf, asked to meet Mr Saikawa but was refused. According to people close to the situation, the banker was then called in by a top Japanese trade ministry official and told directly that the proposed merger could not work.
The plan, orchestrated by Mr Senard, also envisions the French government will sell its stake in the merged entity when the value of the shares rise, said people close to the situation.
While a merger of equals sounds attractive, people close to Nissan and the Japanese government said Renault has not made clear who would become the chief executive of the new group, which side would bear what proportion of any job cuts and plant closures, and which manufacturing platform and engineering technology would become dominant.
“If this merger goes through, Nissan’s corporate value will fall and people will leave the company,” said one person close to Nissan.
Japan’s Ministry of Economy, Trade and Industry, Nissan and Renault declined to comment.