France Keeps Renault Dominance as Ghosn Says Nissan Calmedby and
State's voting rights limited to 17.9% under some conditions
Renault plans non-interference agreement with partner Nissan
Renault’s board, which includes two government representatives, agreed unanimously that the state will maintain a right to double voting power for its stake as of April 2016, the French company said in a statement Friday. In a concession to affiliate Nissan’s concern over interference in its affairs, those voting rights will be capped at 17.9 percent except in certain circumstances.
While Nissan didn’t succeed with an effort to activate voting rights for its 15 percent holding in Renault, the two manufacturers will draw up a contract enforcing non-interference in the Japanese company’s decisions. Renault owns 43.4 percent of Nissan.
“No one likes involvement of the government; it’s not a positive development,” said Sascha Gommel, a Frankfurt-based analyst at Commerzbank AG.
The deal is an effort to stabilize the carmakers’ alliance after France’s government increased its shareholding in Renault in April without giving Chief Executive Officer Carlos Ghosn advance notice. The move exposed weaknesses in the partnership by giving the state more influence over the group than Nissan, which generates a majority of the profit. The 16-year-old tie-up, which was put together when Nissan was near bankruptcy, is held together by the cross-shareholdings as well as by Ghosn’s role as CEO at both manufacturers.
French Economy Minister Emmanuel Macron and Finance Minister Michel Sapin, who have joint responsibility for state shareholdings, welcome the agreement.
“This plan to cap the state shareholding gives full reassurance to Nissan that the state won’t control Renault, while also underpinning the state’s status as the company’s biggest shareholder,” they said in a statement. The ministers “reaffirm their profound attachment to the Renault-Nissan alliance.” |
Renault fell 5.3 percent to 87.84 euros at the close in Paris. That pared the stock’s gain this year to 45 percent, valuing the company at 26 billion euros ($28.6 billion).
France raised its stake in Renault to 19.7 percent in April from 15 percent as it sought to push through extra voting rights under the so-called Florange law, which grants more say to long-term investors. While the increased holding was supposed to be only temporary, France hasn’t lowered the stake and has vowed to maintain a blocking minority at Renault, which is based in the Paris suburb of Boulogne-Billancourt. Ghosn said Friday that the state won’t cut its ownership.
The state’s voting rights can rise to 20 percent at annual shareholder meetings where turnout is unusually high, and the limits also won’t apply to decisions on the dividend, appointment or dismissals of state representatives to the board, an increase in another investor’s stake to above 15 percent and some other “exceptional circumstances,” Renault said.
“At the end of the day, we came to an agreement which is unanimously supported by all the parties,” including the board of Yokohama-based Nissan, Ghosn told journalists on a conference call. “We’re going to put all of this behind us now, and really concentrate now on the development of the business.”