The beginning of the dispute
The disagreement between the two companies was felt as early as 2018, when the architect and former chairman of the Japanese carmaker was arrested. Nissan itself filed a lawsuit against its boss Carlos Ghosn in a Yokohama court, demanding compensation in the amount of $90 million. This was because the CEO was supposed to have caused extensive financial damage. However, there were tensions in the Renault-Nissan alliance long before that. The Japanese felt inferior because Nissan owned only 15% of the shares in Renault, while Renault held up to 43% in its Japanese 'colleague'. This disparity resulted in Nissan having no voting rights within the alliance.
Rebuilding relationships
The reason for the increased attention on the two companies at the moment is the announcement of a restructuring plan and the conclusion of a new agreement. Nissan has decided to buy a 15% stake in Renault's Ampere electric car division. The aim of this move is to make the two partners more equal. The companies said in a statement that another alliance partner, Mitsubishi Motors, would also consider investing in this division.
15-year cooperation
The aforementioned alliance should be flexible and more balanced for at least the next period, namely the next 15 years, according to Renault CEO Luca de Meo. The concrete figures are that the French carmaker will reduce its stake in Nissan to 15% from around 43% by transferring a 28% stake to a French trust. Renault will also be able to flexibly sell Nissan shares held in the trust.
Share value development
As for Nissan's shares, they have seen a decline of around 30% over the last year.* However, the significant decline may be an interesting opportunity for investors who have been waiting for a more affordable price and the news may have a positive impact on the development of their value. [1] In contrast, the other French car company mentioned above has seen its share value rise by around 5% over the past year.
*Nissan Motor Co Ltd ADR stock performance over the last 10 years. (Source: Investing)
Renault SA's stock performance over the last 5 years. (Source: Investing)
Olivia Lacenova, Chief Analyst at Wonderinterest Trading Ltd.
* Past performance is no guarantee of future results.
[1] Forward-looking statements are based on assumptions and current expectations, which may be inaccurate, or the current economic environment which may change. Such statements are not guarantees of future performance. They involve risks and other uncertainties that are difficult to predict. Results may differ materially from those expressed or implied by any forward-looking statements.
