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|29th October 2015, 13:50||#1|
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Renault-Nissan Alliance: Nissan wants to break free?
The Renault-Nissan alliance has been one of the few successful business partnerships that the automobile industry has witnessed. Joined hands in 1999, the alliance has been mutually beneficial to both the companies. Renault currently owns 43.4% stake in Nissan, while Nissan owns 15% stake in Renault. The alliance has also joined hands with Daimler AG holding 3.1% stake, while Daimler AG holds 3.1% stake (each) in Renault and Nissan. Since April 2015, there has been a power struggle within the alliance, and now in a three-page document sent to the French government, Nissan demands for changes to the 16-year-old alliance, giving the companies equal weight for better decision-making and a cross-shareholdings of 25-35%.
How did it start?
In April 2015, French President François Hollande's government passed a new Florange Law, that awarded long-term investors (who hold shares in a company for over 2 years) with double voting rights. This law was heavily criticized by several companies, including the Renault-Nissan alliance who were concerned about how it would affect decision-making and also disrupt the voting ratio. Also, this move did not benefit Nissan in any way.
According to the Florange Law, company shareholders could vote against this policy and maintain the system of one-vote system. In order to tactfully counter this, the French government raised its stake in Renault, from 15% to 19.7%, by buying in 14 million additional shares resulting in two-thirds of the shareholders agreeing to adopt the Florange Law.
The next step?
Carlos Ghosn, chairman and CEO of both Renault and Nissan has always been against this Law and is now mulling strategic steps to ensure that Nissan's interest are safeguarded. The French manufacturer is considered as the controlling partner in the Alliance while the Japanese is the more profitable one. The alliance needs to be re-balanced now and Nissan's voting rights could be revived if Renault's stake falls below 40% according to an article in Japan Times. With a higher stake in Renault (25-35%), Nissan would become the biggest stakeholder of the company but this move would reduce Renault's control in Nissan. It will be interesting to see the next move by Carlos Ghoshn in the weeks to come.
|31st October 2015, 09:38||#2|
Join Date: Feb 2004
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Re: Renault-Nissan Alliance: Nissan wants to break free?
Hardly surprising. Nissan is now a far stronger car company worldwide. Renault & Ghosn helped a near-dead Nissan in the late nineties, but now the tables have turned and Renault needs Nissan more than vice versa.
It's going to be a power struggle to watch. Ghosn isn't one to give up easily. Equally, being under Renault's control is a decision that Nissan had to make at one time. Things might have changed today, but the instance of smaller / weaker companies controlling larger organisations is very common.
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