Business / Corporate

Nissan mulls raising stake in Renault to 25% to block government influence

Kyodo

Nissan Motor Co. is considering raising its stake in Renault S.A. to 25 percent from the current 15 percent as a way to counter the French government’s influence over their alliance, sources familiar with the matter said Tuesday.

Nissan, the nation’s second-biggest carmaker by volume, discussed countermeasures at a board meeting Monday as the government’s voting rights in Renault are set to rise to 28 percent in 2016.

A law was passed in France last year to double the voting rights of investors owning shares for at least two years unless rejected by two-thirds of shareholders.

The Renault board’s attempt to block the adoption of the double-voting rights system failed at the shareholders’ meeting in April after the French government, as its biggest shareholder, temporarily raised its stake to almost 20 percent.

Renault has a 43.4 percent stake in the Japanese partner, giving the French government more say in the Japanese carmaker’s management once the government’s stake in the French company is raised next year.

Under Japanese corporate law, Nissan can nullify Renault’s voting rights if it holds 25 percent or more of the French carmaker.

Nissan cannot exercise voting rights in Renault under a French law as long as the French partner’s stake in it exceeds 40 percent.

Renault will discuss how the Franco-Japanese alliance can deal with the matter at a board meeting this month before holding talks with the French government and deciding on a course of action.

Japanese industry minister Motoo Hayashi told a news conference that the government can provide support to help discussions proceed smoothly.

It is important that the alliance continues in a form acceptable to Nissan, he said.

On Tuesday Chief Cabinet Secretary Yoshihide Suga said, “I hope the related parties will find common ground where they can agree with each other so that Nissan and Renault will be able to continue their current relationship.”

He also said the government is ready to provide “necessary help” for any negotiations.

Nissan and Renault formed a capital alliance in 1999 when the Japanese company found itself mired in a financial crisis and sought assistance from the French automaker.

Under the leadership of Carlos Ghosn, who was dispatched from Renault, Nissan soon recovered from its predicament following significant cuts to the company payroll and the introduction of economizing measures such as the joint procurement of parts.