(BFM Bourse) – The Renault group has confirmed a review of the governance of the alliance with Nissan, which involves rebalancing cross-shareholdings between the two groups. The market had nevertheless largely anticipated these announcements which do not reveal any real surprise.
The sea serpent will finally come out of the water. Long advocated by analysts, the overhaul of the Renault-Nissan alliance (to which we add Mitsubishi, of which Nissan owns 34%) is in the starting blocks.
The diamond group confirmed it on Monday by delivering the main axes of this overhaul. According to the terms communicated, Renault, which owns 43.4% of Nissan, will return to a capital equal footing with Nissan, with each automotive group owning 15% of the other. Nissan will then be able to recover the enjoyment of the voting rights attached to its participation, which is currently impossible for it under French law on “self-control”, as long as Renault holds more than 40% of its capital.
The remaining 28.4% of Nissan’s stake in Renault will be housed in a French trust, which will neutralize the voting rights attached to this stake while the economic rights (dividends, proceeds from the sale of shares) will be retained. “Renault Group would instruct the trustee to sell these Nissan shares if the economic conditions are reasonable for Renault Group, within the framework of an organized and orderly process, but it would have no obligation to sell its shares within a specific predetermined period” , the company said in a statement.
“Not a lot of news”
Nissan for its part will take a stake in Ampère, the future electrical subsidiary of the diamond group which could be listed on the stock market this year. The extent of this participation was not disclosed. In addition, the allies explain that this plan – which must still obtain the approval of the two councils of the companies – will relaunch the partnership between the two companies. The press release cites “key projects” in Latin America, India and Europe, the details of which have not been specified. Except that they will be articulated according to three “dimensions”: “markets, vehicles and technologies”.
For now, the market is taking note of the information by taking profits. Around 2:20 p.m., Renault shares fell 3%, posting the largest drop in the CAC 40. Since the start of the year, Renault shares have risen 18%, posting the fifth largest increase in the stock market’s flagship index. from Paris.
As UBS points out, Renault’s announcement hardly comes as a surprise to investors, as it doesn’t bring “many new things” compared to the press leaks of the past few weeks.
“The title is down, quite simply because there are no bad surprises in the group’s communication. The market thus sells the news after having bought the rumour”, explains Michael Foundoukidis, analyst at Oddo BHF.
“However, it will be interesting to have the details of the new joint projects between the two groups because that is what will generate synergies,” he continues. Last November, Renault delivered ambitious financial targets during a day dedicated to investors. But this plan did not then include the new projects (and therefore the potential synergies) that could arise from its cooperation with Nissan and/or Mitsubishi.
Billions of euros to monetize
It also remains to be seen how much Renault’s partial capital withdrawal from Nissan will ultimately yield. In a note published last week, Bernstein pointed out that by applying a 5% discount to the Nissan share price, the sale of around 28% of Nissan shares would bring in around 3.4 billion euros in cash for the group. to the diamond.
However, this is only a theoretical estimate, the trust could very well sell this interest over several years, which would also be more easily absorbed by the market. And would allow Renault to wait for Nissan’s share price to recover before pocketing its gains.
In the meantime, observers will be able to comment on this reorganization of the alliance at their leisure, and wonder if it is a weakening of the work initiated by Louis Schweitzer and Carlos Ghosn in 1999. Or, on the contrary, if this constitutes a necessary shift to improve relations and guarantee the sustainability of the union between the two groups.
“It’s not a divorce. The Alliance will work much better in a more pragmatic way with a 15%-15% ratio and will return to very concrete projects”, slice for his part Michael Foundoukidis.
Julien Marion – ©2023 BFM Bourse
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