Nissan under pressure after FCA partnership announcement
The Carlos Ghosn soap opera aside, the Nissan – Renault partnership has not been an easy one for the last year. The prenup states that Renault owns a large 43.4% stake of Yokohama’s car manufacturer, whilst the Japanese own just a 15% nonvoting stake in its French partner. If (or when) the merger between Renault and FCA becomes a fact, the Nissan board it at risk of losing grip on its own company.
Leadership
Ghosn, who pursued a progressive French agenda (autonomous, focus on financial services, electrification,…) has been replaced by Hiroto Saikawa, his former protégé, who accused him of financial misconduct; it is Saikawa-san who’s now standing on the sidelines, trying to figure out what impact the FCA deal might have for Nissan.
This comes in addition to the tensions created by Renault Chairman Jean-Dominique Senard’s ambitions to merge Renault and Nissan, a move described by Saikawa as “not necessary” and a risk of damaging “Nissan’s power to create value.”
FCA
In the meanwhile, Renault’s new relationship with Fiat Chrysler Automobiles is on a high; FCA reached out to the French and proposed a merger. On paper, the performance of this power couple is impressive: a future Renault-Nissan-Mitsubishi-FCA group would have resulted in a combined number of 15.59 million sales, exceeding Volkswagen’s performance worldwide. But also in the US, the new group would overtake market leader GM.
In addition to pure sales volumes, the synergies between the partners would generate a benefit of 1 billion Euro.
All about control
Since the announcement, all involved parties have been carefully calculating the impact that a potential merger might have. Nissan will lose control of its own company and is carefully looking at the fine-print of its prenup with Renault: the terms of the alliance state that, in case of undue interference from Paris, Nissan is allowed to increase its stake in Renault. If these stake rises to 25%, Renault would lose its voting rights at Nissan.
The French government, who owns a 15% interest in Renault, is not entirely happy either with the automaker’s Italian-American affaire… A merger would dilute its influence on the strategy of the Alliance. Fun fact: it’s the French economy and finance minister Bruno LeMaire who has been pushing for a merger between Renault and Nissan.
Outcome?
Whatever happens, neither Nissan nor the French government seem to be very excited to take up the role of bystanders. The merger – that LeMaire insists must take place within the framework of the Alliance – will make for a new powerplay, leaving Nissan probably even more frustrated than it is today.
