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Home » Latest News » Nissan to reject Renault integration proposal – no to merger, yes to equal capital relationship – report

Nissan to reject Renault integration proposal – no to merger, yes to equal capital relationship – report

According to reports, Nissan is set to reject a management integration proposal from alliance partner and major shareholder Renault. The Japanese carmaker will also call for an equal capital relationship to replace the current lopsided one.

According to Japan’s Nikkei, citing sources, Nissan’s management feels the company has not been treated as an equal of Renault under existing capital ties, and a merger would make this inequality permanent.

This has previously been cited as the contentious issue that got former Renault-Nissan-Mitsubishi Alliance chief Carlos Ghosn into the trouble he’s in now. Facing charges in Japan, Ghosn insists that he’s a victim of a boardroom coup and “backstabbing” by Nissan executives opposed to closer ties with Renault.

Nissan CEO Hiroto Saikawa declined to comment. “Now is not the time to think of such things. At the moment we are focused on improving Nissan’s earnings performance. Please give us time to do that,” he said. Renault has also declined to comment on the Nikkei report.

It’s easy to see why there’s tension between Nissan and Renault despite both carmakers profiting from the marriage. The alliance started when Renault saved Nissan from the brink of bankruptcy in 1999, by buying a 36.8% stake in the Japanese company. Later, this was bumped up to 44.4%, and Nissan reciprocated by buying 15% of Renault shares. Renault, which counts the French government as a major shareholder, sits on the Nissan board. Nissan’s 15% stake in Renault is without voting rights.

The shareholding is not very equal, and that’s before taking into account that Nissan is now the larger and more profitable carmaker than Renault. If this were a human relationship, Renault swooped in and provided support at a moment of weakness from Nissan, and has profited handsomely from its spouse’s success since then.

It wants more. According to Nikkei, Renault has argued in its proposal that an integration would maximise synergies within the alliance. The Financial Times reported last month of Renault’s intention to restart merger talks with Nissan within 12 months. So, besides the Ghosn case playing out in court, expect a Franco-Japanese corporate wrestling match happening concurrently.

What will Nissan do to get its way? Why would Renault (and France) give up its upper hand? It’ll be interesting to watch. Meanwhile, hear what the man in the middle of the war – Carlos Ghosn – has to say in the video above.

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