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Renault hits the brakes on Nissan alliance

June 10, 2019

 

A two-decade strategic alliance between Renault and Nissan is under threat as the two motor manufacturers fall out over governance in the wake of the collapsed Renault-Fiat merger and scandal surrounding former Chairman Carlos Ghosn.

 

Renault, based in France, owns 43.4 percent of Nissan, headquartered in Japan. Renault threatened to block Nissan's new business structure - which is being put before shareholders - unless it received representation on three new governance committees.

 

"Nissan has received a letter from Renault indicating intention to abstain from voting," Nissan said in a statement.

 

"Nissan finds Renault's new stance on this matter most regrettable, as such a stance runs counter to the company’s efforts to improve its corporate governance."

 

By scuppering Nissan's plan and by abstaining from the vote, which would require approval from two-thirds of shareholders, Renault appears to be repaying Nissan in kind, after Nissan threatened (as a shareholder in Renault) to abstain from voting to approve a mooted merger between Renault and Fiat.

 

But Renault and Fiat Chrysler Automobiles are looking for ways to breathe new life into their moribund merger and secure Nissan's approval, Reuters reported on Monday. Nissan is therefore poised to urge Renault to significantly cut its 43.4 percent stake, two sources told Reuters.

 

Nissan President and CEO Hiroto Saikawa is under pressure to improve ties between the companies.

 

"We are preparing for the shareholder meeting and will discuss necessary issues at the appropriate time. If there are differences of opinion, then I'd like for those to be discussed," he told Japan's Jiji news agency.

 

Renault's rights "need to be fully recognised", Renault Chairman Jean-Dominique Senard said in his letter just weeks ahead of a crunch shareholder meeting, according to Reuters. "At a minimum, one or two directors proposed by Renault should be members of each of the three committees.

 

"As currently proposed, this does not seem to be the case."

 

The shake-up of Nissan's governance structures follows the arrest in November of Carlos Ghosn, formerly chairman of Renault, Nissan and Mitsubishi, who oversaw a complex partnership between the three motor makers.

 

Ghosn is awaiting trial and denies the financial misconduct charges against him.

 

Renault CEO Thierry Bollore wants to sit on new Nissan committees controlling executive nominations and compensation, and a planned corporate governance auditing committee, a Nissan source told Reuters.

 

But such a move would raise concerns about a possible conflict of interest, as it would give Renault a say in Nissan salaries and corporate governance, the Nissan source said.

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