Nissan’s Uchida and Gupta and Renault’s de Meo and Provost spent all day Saturday and Sunday speaking on the sidelines of the Formula 1 Japanese Grand Prix in Suzuka and nearby Nagoya. The four flew to Tokyo together and continued discussions on Monday in Yokohama, where Nissan is headquartered.
Renault’s sale of its stake in Nissan will not happen right away. One option being discussed is placing shares in a trust and giving Nissan the right of first refusal for any stock that is offered for sale, according to the person familiar with the talks.
While Nissan may buy back some of its shares, Renault has no plans to sell right away because it would have to take an impairment by selling at current prices, and will seek an orderly disposal of stock.
Any agreement will include provisions preventing Renault from selling shares to a competitor or to an activist investor, the person added.
Renault’s voting rights will also be capped immediately when the deal goes into effect. The changes will require a new operating agreement between the companies, the person said.
Nissan’s position
The block of shares to be set aside is currently worth about €4 billion ($3.9 billion). Nissan had ¥1.47 trillion ($10.1 billion) of cash and equivalents at the end of June, giving the company plenty of leeway to invest in Renault’s EV business and repurchase some of its shares.
Nissan’s profitability and sales are better than forecasts, and the company will likely raise its outlook when it reports quarterly results in early November, the person said.
Renault is trying to secure an agreement with Nissan before its capital markets day around the same time, on Nov. 8. One sticking point in negotiations is Nissan’s reluctance to allow Renault to transfer combustion-powertrain technology to Aurobay, a joint venture between Volvo Cars and China’s Zhejiang Geely Holding Group, and other investors.
The French state, which has a 15 percent shareholding in Renault, also would need to approve the companies’ plans.
Some of the hurdles for the combustion-powertrain deal include securing blessing from the Japanese government, and from Dongfeng Motor Group, Nissan’s long-time partner in China.
Uchida has been briefing officials at Japan’s Ministry of Economy, Trade and Industry on the implications of Renault’s carve-outs and potential tie-up with Aurobay.
Talks are focused on Renault retaining a minority stake in the legacy business and possibly aiming for an initial public offering, people with knowledge of the matter have said.
