Renault-Nissan Ties Get Even Shakier

The Nissan Motor Co. logo sits on display on day two of the 89th Geneva International Motor Show in Geneva, Switzerland, on Wednesday, March 6, 2019. The show near Lake Leman, which opens to the public from March 7 to 17, will be the first gilded showcase of the year for the likes of Bugatti, Koenigsegg, Lamborghini, and Pininfarina, among others. Photographer: Chris J. Ratcliffe/Bloomberg

(Bloomberg) — Renault SA’s alliance with Nissan Motor Co., already stressed by the Carlos Ghosn affair and a failed merger proposal by Fiat Chrysler Automobiles NV, lurched toward a new crisis after developments over the weekend highlighted the deep divide between the two-decade partners.

The government of France — Renault’s most powerful shareholder — extended an apparent olive branch on Saturday when Finance Minister Bruno Le Maire said during his G-20 trip to Fukuoka, Japan, that the state is willing to reduce its 15% stake in the French automaker if such a move would strengthen the alliance.

The suggestion was dismissed in Tokyo, where Nissan sees France as a cause of tension in the alliance and would prefer a full exit by the government, according to a person familiar with the matter. Regardless, Le Maire added the following day that any sale would be a long-term objective, giving near-term priority to “reinforcing the Renault-Nissan alliance.”

Separately, Renault Chairman Jean-Dominique Senard sent a letter on Saturday to Nissan Chief Executive Officer Hiroto Saikawa, threatening to abstain from voting on Nissan’s new governance structure during its upcoming shareholder meeting, a person familiar with the matter said. Because Renault owns 43% of Nissan and the measure requires two-thirds vote, an abstention would prevent the proposal from passing.

“If there is any difference in opinion, we will discuss it,” Saikawa told reporters early on Monday. Asked about Le Maire’s comments, the CEO said he shares the minister’s view that the alliance is important.

The French automaker is seeking better representation than Nissan’s current plan to set up three committees on nominations, remuneration and auditing, the person said, asking not to be identified because the letter isn’t public. The move threatens to further inflame already strained relations, even as the person cautioned Renault hasn’t made a final decision on its vote and was still in negotiations.

While Renault understands Nissan’s desire to improve its governance, the so-called three board level committees system “should not serve as a tool directed or used against Nissan’s largest shareholder,” the letter said.

Nissan has long complained that the partnership with Renault is unbalanced, and that the French government’s outsize role at Renault, with board representation and extra voting rights, gives the state undue influence over the Japanese carmaker. Nissan owns a 15% stake in Renault, but with no voting rights, and has been seeking more power in the partnership rather than the “closer ties” sought openly by the French state and pursued first by Ghosn and later by Senard.

Senard, who was brought in by the French government to smooth the relationship with Nissan, has instead pressed Nissan for a merger it didn’t want, then pursued the mega-deal with Fiat Chrysler. Those collapsed in acrimony last week after Nissan, which has two seats on Renault’s board, declined to explicitly support the deal.

The French government played a major role in the deals collapse, having sough to postpone Renault-Fiat talks until after Le Maire’s trip to Japan, so as to seek explicit support from Nissan before going forward. The demand caused the ire of Fiat, which withdrew its offer Thursday, months after negotiations first started.

While both France and Fiat have left the door open to restart talks with the Italian-American automaker, Le Maire over the weekend re-asserted the demands, including Nissan buy-in. That leaves little room for Fiat to return to the table.

Renault is now left with its troubled alliance with Nissan and the third partner, Mitsubishi Motors Corp. The two companies already share platforms and technologies, and continue working together despite the tensions that have flared up since the arrest of Ghosn, their former leader whose stature helped keep tensions below the surface. Ghosn, who was jailed twice starting in November on allegations of financial wrongdoing, denies the charges. He is out on bail awaiting trial in Japan.

Looming Over

Le Maire is set to meet Japan’s finance minister Taro Aso Monday, but hasn’t planned any meeting with Nissan’s management. The French finance minister, who seeks to strike a difficult balance between giving autonomy to the companies and pushing a deeper integration between the two, told reporters Sunday that it wasn’t “his role” to meet with Nissan’s CEO. It’s up to the companies’ managers to figure out how to work more closely together, he added.

Governments will keep playing a role regardless. Le Maire said Sunday that the government’s responsibility was to secure jobs as well as industrial and research sites. The Japanese government has also played its part — including by intervening to defend Nissan’s independence from Renault last year.

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