French automaker Renault, after a nearly 24-year-long alliance, announced its decision to slash its stake in partner Nishaan to rebalance the alliance between the companies. Renault will reduce its stake to 15 per cent from its earlier 43.4 per cent to make the shares of both organisations equal.
Why is Renault cutting its stake?
The decision comes as a means to address the longstanding friction between both companies and, at the same time, remain competitive in an industry that is moving towards electrification and automation.
According to Bloomberg, Nissan makes more cars and owns only 15 per cent but no voting rights, while Renault owns more shares at 43 per cent with voting rights. Both companies agreed to this, as it would address a power imbalance considering that Nissan doesn't have voting rights.
What will happen to the pending shares?
After the deal, the French automaker will not immediately sell the outstanding 28.4 per cent Nissan shares, as the current value in the market is lower than that registered in Renault's accounts. According to the report by Bloomberg, the company instead of sale is planning to place the shares in a trust until the prices improve.
After receiving approval from the boards of both companies, the companies will reportedly sign a new agreement next week.
Nissan to invest in Ampere
Nissan is also expected to invest in the French carmaker's electric vehicle business, called 'Ampere'. The amount and size of the stake are still unknown. Renault in November 2022 had announced the split in operations of a separate subsidiary for petrol, diesel and hybrid and its new venture Ampere. The petrol, diesel, and hybrid subsidiary is expected to pair with China's Geely.
This alliance between Renault and Nissan was joined by Mitsubishi Motors in 2016, after Nissan took a 34 per cent stake in the struggling Japanese company. Mitsubishi Motors is also planning to collaborate on specific projects in India, Europe, and South America.
