Report: Renault, Nissan in Talks that Could Revive FCA Merger

Renault and Nissan are discussing ways to rebalance their 20-year-old alliance. A solution could revive merger talks between Renault and Fiat Chrysler Automobiles, says The Wall Street Journal.

Proponents assert that combining FCA and Renault would result in a powerhouse that provides huge benefits for both carmakers and the Renault-Nissan alliance. Last week FCA CEO Mike Manley told analysts the company remains open to a merger.

FCA made the merger offer in late May. But it withdrew the bid less than two weeks later, citing French government interference. The state holds a 15% stake—and double voting rights—in Renault. France has vigorously opposed changes in the alliance, especially those it believes would weaken the partnership and/or hurt the French job market.

Nissan, which is larger than the French carmaker, has long chafed at the equity structure of their partnership. Renault owns a 43% voting stake in Nissan, and the Japanese carmaker holds a 15% nonvoting share of Renault.

Citing sources and internal emails, WSJ says Nissan wants Renault to reduce its holding to 5%-10%. The newspaper’s sources also emphasize that the talks are in the early stage and may not result in any action.

Nissan’s core negotiating team reportedly consists of CEO Hiroto Saikawa, Senior Vice President Hari Nada and independent board member Masakazu Toyoda, a former official with Japan’s Ministry for Economy, Trade and Investment.

WSJ quotes a Nissan email that says Toyoda believes the cross shareholding arrangement is a burden to both companies. He points out that the structure ties up capital that each could use to invest in new ventures.

Toyoda recommends that Renault and Nissan sell down their equity in each other and create a new joint venture, controlled by the two carmakers and designed to bolster their commitment to the alliance.