Shares in Renault hit levels not seen for more than a decade on Thursday following a report the French brand is to merge with Nissan.
The two companies, which have operated an alliance since 1999, would form a new, single, listed company under the plans being discussed, according to the Bloomberg financial news service which cited information from several sources.
Neither company has commented on the report.
A deal has the potential to make the combined entity the world’s largest carmaker by production, though any agreement would expect to result in significant savings.
Image: Nissan’s Sunderland plant was opened in 1986
Nissan is a major employer in the UK, employing 7,000 people at its sprawling production plant on Wearside, while Renault has a minimal presence in the country.
The status of their current relationship came to a head earlier this month when the Reuters news agency said Nissan was seeking to buy up much of the French government’s 15% holding – adding to its own 15% stake.
Bloomberg suggested the state’s shares could prove the biggest obstacle to a potential deal.
Other considerations included where the company would be based, it said, with London and the Netherlands in the frame, though such a move would also likely face government hostility in both Paris and Tokyo.
The companies, which have shared engines and chassis designs, have the same chairman – former Nissan chief executive Carlos Ghosn.
Image: Carlos Ghosn is chairman of both companies
Shares in Renault rose by more than 8% in early trading on the report in the French capital. They later fell back slightly.
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Nissan investors did not even get the chance to react as deals in Japan had already closed for the day.
Speculative hopes of wider M&A activity in the sector helped other auto shares accelerate, with the values of Daimler, Peugeot, Porsche and Volkswagen all rising.