TOKYO – Attack of Alliance Head and Spin Carlos Ghosn has not deterred the French government from pushing to permanently combine Renault and Nissan Motor in a way that would strengthen its influence over both.
The French newspaper Le Figaro reported Monday, Renault will hold a board meeting as early as Wednesday to determine its new leadership. The French government – which owns about 15% of Renault – is said to lead the search for Ghosn's successor as CEO, allowing the new boss to officially seek a merger with Nissan. Paris has recently sent a delegation to inform Tokyo that it intends to bring the two car manufacturers together under a holding umbrella.
Paris has long wanted to tie the couple irrevocably. Renault, which owns 43.4% of Nissan, derives much of its income from dividend payments from its larger partner and depends on Nissan technology in areas such as electric cars. And Nissan cars are produced at Renault factories in France and create jobs in a country suffering from high unemployment.
French finance minister Bruno Le Maire reportedly asked to meet with the Japanese counterpart Hiroshige Seko. He hopes to do so at this week's World Economic Forum meeting in Davos, Switzerland, which Seko participates, although planning problems can make it difficult to arrange.
This is believed to mark Paris' third push for integration. In 201
The move was assumed to be part of a bid to construct a merger under conditions that would have given the French government significant influence over the alliance. Ghosn protested, and the two sides were finally settled for an event during which Paris could exercise double voting rights such as strategic operations in France.
In France the government demanded last year that Ghosn promises to make the alliance "irreversible" as a condition for his re-appointment as Renault CEO. Ghosn was predominantly considering combining the two car manufacturers under a holding company, but such plans would have been cut down with his arrest in November.
At first glance, a holding company-based arrangement seems to be beneficial to Nissan, since control is typically based on valuation of the companies involved.
Nissan is almost twice the size of Renault, with a market value of 3.87 trillion (USD 35.3 billion) for its partner's $ 16.83 billion. EUR 19.1 billion (this would mean that the new company shares split about 65% to 35% between Nissan and Renault shareholders, although the actual split would depend on how their stock prices move.
But the main relationship between car manufacturers When Nissan's shares were converted into holding company, Renault would be entitled to 43.4% – a share of about 28% in the new company, assuming a share of 65-35.  Meanwhile, the French government, with its 15% stake in Renault, would only own 5% of the holding company, although it may weaken its position, giving the French contingent as a whole – that is, Renault plus Paris – directly ownership of about one third of the new entity.
It would essentially give them vetor power over important proposals requiring the approval of two-thirds majority of shareholders' meetings, something Nissan is willing to allow Deputy CEO Hiroto Saikawa insists that the issue of reassessing the capital relationship between automakers is "not in the discussion phase." stays on top in all cases.
Nissan worries that integration under the holding model proposed by Paris would give the French side greater influence on disputed issues such as the location of the new entity. Paris is expected to push for headquarters in France for tax purposes. Ghosn had allegedly considered the Netherlands as an option, but Elysee is unlikely to bid on this point.
The debate is also likely to draw on the Japanese government, which is aware of its own declining tax revenue.
Board appointments can also become a flashpoint. The holding company team and the share of board members from each of the two car manufacturers reflect the power balance. An integration tracked by the French government would risk pulling the alliance further away from the equality partnership that Nissan wants.