December 2, 2015 / 1:46 PM / 3 years ago

New Nissan bid to end Renault control and curb French clout: sources

PARIS (Reuters) - Japanese carmaker Nissan (7201.T) has set out new proposals to end parent Renault’s (RENA.PA) control and block French government interference in their alliance, two sources said on Wednesday.

A man walks past the logo of Nissan Motor Co. at the company's showroom in Yokohama, south of Tokyo June 23, 2015. REUTERS/Toru Hanai

The revised demands aim to defuse a governance row that erupted in April when French Economy Minister Emmanuel Macron raised the government’s stake in Renault to 19.7 percent from 15 percent to secure double voting rights.

In a document outlining its position, Nissan is seeking limits to state voting rights in Renault as well as written guarantees against intervention in its operations by the French carmaker, which owns 43.4 percent of Nissan, the sources familiar with the matter said, confirming a report in Le Figaro.

Under the new proposals, any breach of the undertakings would free Nissan to buy shares in Renault and cancel their alliance agreement.

The Renault-Nissan alliance and the French government declined to comment.

The standoff between Macron and Carlos Ghosn, chief executive of both carmakers, is set to come to a head on Dec. 11 when Renault’s board is due to decide on a response to the French government power grab.

Nissan and French officials have been negotiating for two months to resolve the dispute.

In confidential proposals revealed by Reuters, Nissan had threatened steps to end Renault control by raising its own stake in the French carmaker to at least 25 percent and activating voting rights. Nissan currently owns a non-voting 15 percent stake in Renault.


France offered last month to limit the exercise of its voting rights in Renault, sources told Reuters. Under a new French law, the state’s voting power is set to rise to 28 percent from 18 percent - an effective blocking minority - even after its equity stake is cut back to 15 percent.

Both sides are “working on a compromise”, a source close to the negotiations said on Wednesday, adding that Nissan’s demands “seem to move closer to what the government had proposed”.

The conflict reflects the gap between Renault-Nissan’s formal structure - in which Renault enjoys complete control - and the reality of alliance operations and management. Since its 1999 rescue by Renault, Nissan has far outgrown its French parent and leads the way in engineering and other areas.

Nissan’s proposal, drawn up at a board meeting on Monday, softens earlier demands for voting rights in Renault and changes to the cross shareholdings, the sources said.

Instead, Nissan is seeking to neutralize Renault’s control of the Japanese carmaker through written undertakings. Their 2002 alliance agreement grants Renault the right to name Nissan’s top three executives, among other prerogatives.

Nissan wants signed commitments that Renault will not intervene in its governance or operations, according to Le Figaro - curtailing the French company’s influence.

While Renault’s legal control of Nissan has been left dormant under Ghosn’s joint management, the voting rights dispute reflects Japanese concern that a Paris-backed successor could one day exercise the French carmaker’s full rights to impose decisions.

“We need governance put in place to prevent this happening again in the future and distracting everyone,” a source close to Nissan told Reuters. “What the French intervention has revealed is that the current alliance structure is inadequate.”

Additional reporting by Norihiko Shirouzu in Beijing; Editing by James Regan and David Clarke

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