Nissan in talks to buy France’s Renault stake in merger prelude

Carlos Ghosn, Chairman and CEO of the Renault-Nissan Alliance, in a file photo attending a news conference to unveil Renault's mid-term strategic plan in Paris, France, October 6, 2017. (REUTERS)
Updated 07 March 2018
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Nissan in talks to buy France’s Renault stake in merger prelude

LONDON/FRANKFURT/GENEVA: Renault and alliance partner Nissan are discussing plans for a closer tie-up in which the Japanese carmaker would acquire the bulk of the French state’s 15 percent Renault holding, people close to the matter told Reuters.
The carmakers are in talks with government officials over proposals by Renault-Nissan boss Carlos Ghosn that would see Paris give up influence at Renault and the French carmaker relinquish control over Nissan, according to three sources.
But any deal still faces significant hurdles — not least its extreme political sensitivity in France — and has yet to win government approval, they said. To do so, it must balance French and Japanese interests, avoiding the appearance of a takeover.
“Any discussion about a share transaction involving Renault, Nissan or the French state is pure speculation,” Renault-Nissan spokesman Jonathan Adashek said. The alliance “has no plans to change the cross-shareholding ratio of its member companies,” he added.
French government officials did not return calls and messages seeking comment.
Renault is being advised by BNP Paribas and Nissan by Nomura on the planned stake sale, which would happen either as part of a broader Renault-Nissan combination or as a “stepping stone” on the way to one, the sources said. The banks did not respond to requests for comment.
Ghosn has also proposed an interim structure that would see management of Renault, Nissan and Mitsubishi Motors overseen by a Dutch foundation as a prelude to their integration as a global automotive group based in Amsterdam, sources said.
Renault shares rose sharply on the news, and were 8.2 percent higher at 96.73 euros as of 1604 GMT.
The Renault-Nissan alliance, underpinned by cross-shareholdings, has wrestled intermittently since its 1999 inception with plans for full mergers that have foundered on objections from France, Renault’s biggest shareholder.
But with Ghosn, the alliance’s main architect, now beginning his final term as Renault CEO, the government has been pressing for a tie-up to secure the future of Renault-Nissan, the world’s largest carmaking group by sales last year.
President Emmanuel Macron’s government recently told Ghosn’s representatives it would be ready to exit or sell down its Renault holding as part of a merger deal that secured French interests, according to multiple sources close to the talks.
Renault holds 43.4 percent of Nissan but agreed to limit formal control of its larger partner in a 2015 shareholder pact that defused a boardroom standoff with the French government. Nissan currently owns a 34 percent controlling stake in Mitsubishi and 15 percent of Renault, but no voting rights.
Under Tokyo market rules, Renault would lose all voting rights on its Nissan holding if the Japanese carmaker raised its Renault stake to 25 percent or more.
Any move by France to sell most or all of its Renault stake could prove politically risky for Macron, already under fire for letting national champions such as TGV train maker Alstom fall into foreign hands.
Beyond its dilution and loss of influence, France remains concerned about the impact on technology centers, industrial jobs and tax revenues from a combined group headquartered elsewhere, the sources said.
To win acceptance, they added, the deal would need to include powerful concessions and guarantees to France, in areas such as jobs and investment, board representation and possible “golden share” veto rights over major strategic decisions.


Full-blown US, China trade war to cost jobs, growth and stability — WTO’s Azevedo

Updated 26 min 33 sec ago
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Full-blown US, China trade war to cost jobs, growth and stability — WTO’s Azevedo

  • ‘A continued escalation of tensions would pose an increased threat to stability, to jobs and to the kind of growth that we are seeing today’
  • ‘There would be no winners from such a scenario and every region would be affected’

BERLIN: A full-blown trade war would have serious effects on global economic growth and there would be no winners of such a scenario, the director-general of the World Trade Organization (WTO), Roberto Azevedo, said on Tuesday.
Speaking at a Berlin industry event against the backdrop of growing trade tensions between China and the US, Azevedo said: “The warning lights are flashing. A continued escalation of tensions would pose an increased threat to stability, to jobs and to the kind of growth that we are seeing today.”
A full-blown global trade war with a breakdown in international trade cooperation would reduce global trade growth by around 70 percent and GDP growth by 1.9 percent, Azevedo said.
“There would be no winners from such a scenario and every region would be affected,” Azevedo said. The European Union itself would have about 1.7 percent taken off its GDP growth, he said, adding: “Clearly, we cannot let this happen.”
Azevedo pointed to several reform proposals that addressed trade-distorting practices and the WTO’s existing mechanisms to resolve trade disputes, adding that members had to agree on which reforms they wanted to focus on.
“Clearly, this informed debate is gaining significant momentum and that is positive,” Azevedo said, adding the G20 summit in Buenos Aires in November would be crucial to agree on the next steps to safeguard the rules-based free trade order.
“Of course, the system can be better, in fact it must be better. But it’s nonetheless vital. So while we work to improve it and ensure that it’s more responsible to evolving economic needs, we must also preserve what we have — and I count on your support to that end,” he said.