Investors, suppliers and employees alike will be breathing a sigh of relief today after Renault and Nissan announced they had agreed a new basis for their Alliance that stretches back to 1999 but had looked increasingly rocky in recent months.
Nissan chafed that Renault’s stake in it stood at 43% while it only owned 15% of Renault. That smouldering imbalance has now been defused by Renault agreeing to reduce its stake in Nissan to the same 15%, with the remainder placed in a trust.
Renault still benefits from the dividend of Nissan’s profits that the extra 28% generates, but now both companies have equal say in the future of the other, based on voting rights.
The agreement still needs to be ratified by the boards of both companies, but assuming it passes, Renault and Nissan can resume collaboration on automotive development in an atmosphere of shared trust.
Analysts conveyed their relief to investor clients. “A resized capital structure should help keep the Alliance viable, maintaining synergies and opening up strategic opportunities on both sides,” said Philippe Houchois, automotive equity analyst at Jefferies, in a note.
The bank Bernstein meanwhile raised its rating on Renault’s shares to “outperform”, meaning it reckoned they could do better than those of its peers, based on the news.
“Untying the Gordian knot between Nissan and Renault was a key reason for our upgrade,” analyst Daniel Roeska wrote.
Renault can sell the 28% of Nissan stock to be held in trust, which could unlock an additional €3.8 billion (£3.3bn) of cash to throw at the electrification and software shift, based on Nissan’s current share value.
In addition, Nissan said it would invest in Ampere, Renault’s new EV and software division, “aiming to become a strategic shareholder”.
The partnership can now be “reloaded” with collaboration on “high-value” projects in Europe, Latin America and India, covering vehicles, markets (likely sales distribution and marketing) and technologies.