Nissan and Renault hash things out to come to an equitable arrangement between the two in the Alliance.
Nissan Motor Co., Ltd announced on Monday that it has reached a critical agreement with Renault Group in redefining the foundation of their partnership. Nissan has been planning to buy back shares for a while, but this new agreement achieves its independence and more.
The primary objective of the new agreement is to reinforce the alliance between the two companies and create maximum value for all stakeholders involved. To achieve this goal, Nissan and Renault Group have proposed a three-stage approach to reloading their partnership, enhancing strategic agility, and fostering balanced governance and cross-shareholding.
The first stage of the new agreement involves reloading the partnership with high-value-creation operational projects. This would include key projects in Latin America, India, and Europe, which would be deployed along three dimensions: markets, vehicles, and technologies. This stage aims to increase the efficiency and profitability of the partnership by improving the production and sales of vehicles in these regions.
The second stage of the new agreement involves enhancing strategic agility with new initiatives that partners can join. In line with this, Nissan has announced its intention to invest in Ampere, an EV & software company founded by Renault Group. The investment will position Nissan as a strategic shareholder in Ampere, providing the company with a competitive edge in the fast-growing EV market.
The third and final stage of the new agreement is aimed at fostering balanced governance and cross-shareholding. Under this stage, Nissan and Renault Group will retain a 15% cross-shareholding, with a lock-up obligation and a standstill obligation. Both companies will be able to freely exercise the voting rights attached to their 15% direct shareholding, with a 15% cap. Renault Group will transfer 28.4% of Nissan shares into a French trust, where the voting rights will be neutralized for most decisions, but the economic rights will still entirely benefit Renault until the shares are sold.
The Alliance Operating Board (AOB) will remain the coordination forum for the partnership. The new agreements between Nissan and Renault Group are being finalized, and the transaction remains subject to the approval of the boards of directors of both companies. The alliance members plan to make an announcement immediately after the board approvals are obtained.
In conclusion, the new agreement between Nissan and Renault Group represents a significant milestone in the redefinition of their partnership. The three-stage approach to reloading the partnership, enhancing strategic agility, and fostering balanced governance and cross-shareholding will help strengthen the alliance between the two companies and create maximum value for all stakeholders involved. The investment by Nissan in Ampere and the balanced governance structure proposed in the agreement are expected to provide a competitive edge to the companies in the fast-growing EV market. The agreements are being finalized and subject to board approvals, and the alliance members plan to make an announcement soon.
