In a recent update, automobile giants Renault and Nissan have decided to restructure their long-standing alliance. According to the new agreement, Renault will reduce its shareholdings in Nissan from 43% to 15%. This move has marked a significant milestone in the 24-year-old alliance between the leading automakers.
What is the New Agreement?
According to a statement issued by Nissan, Renault will transfer 28.4% of its shares in the Japanese automaker to a French trust. Voting rights for the stake will be neutralized for most decisions. However, Renault will continue to leverage the financial benefits from the shares until they are sold.
Through a cross-shareholding agreement, both the companies will keep a 15% share in each other’s business. Prior to this move, Nissan had retained a 15% non-voting share in Renault. And Renault, on the other hand, owned around 43% stakes in Nissan. Moreover, according to the agreement, Nissan will invest in Renault’s electric vehicle arm Ampere.
End of a Long-standing Partnership of Renault and Nissan ;
Both Renault and Nissan started their partnership in 1999, which was expanded to include Mitsubishi Motors in 2016. The recent deal came after several months of intense discussions over the restructure of the alliance. Expressing his views on the agreement, Masayuki Kubota (Chief Strategist at Rakuten Securities, Tokyo) said, “For Nissan, any negative impact from a probable share sale by Renault was not likely to last long. Nissan will get a much free rein in the longer term so that it can focus on adapting a long-term strategy in the United States.”
Nissan, Renault agree deal to overhaul alliance
According to reports, Renault has also entered into a long-term strategic partnership with Qualcomm, a U.S chipmaker. Heeding the news, the shares of Renault dropped 1.4% in Europe whereas Nissan’s shares were down by around 0.7% in Asia’s trade market.