Published: Wed, June 12, 2019
Markets | By Otis Pena

After Merger Debacle French Government Wants To Reduce Stake In Renault

After Merger Debacle French Government Wants To Reduce Stake In Renault

Strains within the alliance between Renault and Nissan increased today as the Japanese auto maker criticised its French partner for failing to back its governance reforms.

On Saturday, Le Maire told AFP that Paris might consider reducing the state's 15-per cent stake in Renault if it led to a "more solid" alliance between the firm and its Japanese partners.

A spokesman for Renault, which is Nissan's largest shareholder, had no comment.

"A merger with FCA remains a attractive opportunity, because there's access to the American market and because for FCA there's access to the electric technologies they need", he said, adding that "nothing has changed for the French state" regarding the merger conditions it had previously set.

Nissan recently said it would abstain from voting on the FCA-Renault merger, although both FCA and Renault later blamed the failure of that deal squarely on the French government.

But Renault and Fiat Chrysler Automobiles are looking for ways to breathe new life into their moribund merger and secure Nissan's approval, Reuters reported on Monday. "As now proposed, this does not seem to be the case".

A Renault source said Senard's letter was motivated by concern about Renault's underrepresentation on the new Nissan board committees being introduced following the arrest of Ghosn, who is now awaiting trial and denies the financial misconduct charges against him.

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On Monday, Nissan pointed out that its board, which includes Senard and other Renault executives, voted unanimously in favour of the three committee system, adding that it would keep advocating for the need for the change in governance.

The exact nature of Renault's demand was unclear, but the company, which owns 43% of Nissan, may have wanted more representation on the committees being set up to strengthen corporate governance.

On Sunday, French newspaper Journal du Dimanche reported that Fiat managers informed French authorities on their interest in Renault during the Christmas holidays.

"It's a hard relationship, Nissan and Renault", said Koji Endo, an analyst at SBI Securities Co.

Nissan President and CEO Hiroto Saikawa is under pressure to improve ties between the companies. "If there are differences of opinion (with Renault), then I'd like for those to be discussed". Under the proposal, Renault directors would be free to serve on the nominations committee, but would be barred from the compensation and audit committees.

But they also say Nissan has been hoping to get more say in the alliance because until recently it was more profitable than Renault.

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