Sun, Dec 13, 2015 - Page 13 News List

Renault-Nissan makes deal with French government

AFP, PARIS

Renault SA on Friday said that it had reached an agreement with its alliance partner Nissan Motor Co and the French government to defuse tensions sparked by France raising its stake in the automaker.

The agreement, dubbed “alliance stability covenant,” caps the government’s ability to interfere in the affairs of the Renault-Nissan alliance in return for Nissan’s stock in Renault remaining without voting rights.

The French government raised its stake in Renault to 19.7 percent this year, disturbing the fragile balance between the two companies and angering Renault-Nissan chief executive officer Carlos Ghosn.

That bolstered Paris’ voting rights, effectively denying the Japanese company a say in how the business is operated.

“There is the strong will to put all this behind us,” Ghosn said on Friday after a board meeting which approved the deal.

Under the alliance agreement struck in 1999, Renault owns about 43 percent of Nissan.

Nissan holds about 15 percent of the French automaker’s shares, but without voting rights.

Nissan reportedly wanted the French government to cut its Renault stake back to its previous level and had threatened to raise its own stake in Renault to reassert its influence if France did not budge.

However, the French government has now agreed to refrain from using its newly-won voting rights, except in “exceptional circumstances,” Renault said, calling the debate leading up to the deal “fruitful.”

Nissan chief competitive officer Hiroto Saikawa said he felt his company and the French government “can trust each other” and had reached “a good resolution.”

However, Nissan would not accept any future unwanted interference from Paris, he said.

Under the terms of the deal, the French government is to refrain from using its extra voting rights, except concerning dividends, government representatives on the board, any sale of more than half of Renault’s assets and “interested party transactions not approved by French government representatives on the Renault board,” he said.

It would also exercise its voting rights in the event of any takeover bid on Renault or any investor trying to buy more than a 15-percent stake in the French automaker, he said.

More specifically, any attempt by Nissan to exercise voting rights in Renault would also trigger the government’s use of its extra voting powers, he said.

France’s Minister of the Economy, Industry and Employment Emmanuel Macron and Minister of Finance Michel Sapin said in a joint statement that they welcomed the consensus reached in the agreement on the government’s voting rights which still preserve its right to intervene on strategic issues for the company.

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