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Nissan says no plan to combine firm with Renault

Nissan says no plan to combine firm with Renault
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First Published: Thu, Mar 31 2011. 03 26 PM IST
Updated: Thu, Mar 31 2011. 03 26 PM IST
Detroit: Nissan Motor and French partner Renault are not planning to combine under a holding company as part of the planned evolution of their alliance, the Japanese carmaker said, denying a report.
The Nikkei said on Thursday that Carlos Ghosn, chief executive of both companies, had told the business daily he was looking at putting Nissan and Renault under a single umbrella, and transition to that structure could take place in 2-3 years.
“There are currently no plans to form a single holding company for both Renault and Nissan,” Nissan said, adding the Nikkei article was a misinterpretation of a wide-ranging interview in which Ghosn said the corporate structure of the Renault-Nissan Alliance would remain dynamic.
“Ghosn did not say or imply that Renault and Nissan are ‘leaning toward establishing a holding company´ as the publication reported,” it said.
Nissan shares closed up 1% at ¥737, while the broader Japanese stock market rose 0.5%. Renault shares were up 1.2% at 02:10 pm, outperforming a 0.2% lower European autos sector.
“It is more of a risk than anything else because if you look at what happened with Porsche when they changed the structure from an operating company to a holding company they had to incur a massive tax charge,” said one analyst.
“If it was happening I would see it as a risk and because it is not happening I would see it as a positive,” he said.
Bank of America Merrill Lynch analysts said in a research note they did not think the 11 March Japan earthquake had changed Nissan’s ability to pay a dividend in coming years, and Renault’s sales volumes had been a positive surprise this year.
A sell-off of Renault shares since the start of 2011 because of fears over the impact of the disaster in Japan, disappointment about a strategic plan unveiled in February and negative news about its debunked spying claims was overdone, the analysts wrote, reiterating their “buy” recommendation.
Ghosn has been under pressure from Renault shareholders to review the capital structure of the Franco-Japanese alliance, with about $17 billion of a financially weak Renault’s capital tied up in its 43.4% stake in Nissan. Renault’s market capitalization is currently $16 billion.
Nissan and the French state each own 15% of Renault.
Ghosn told Reuters in an interview last month that addressing the financial market’s unhappiness with the capital structure was his biggest challenge, adding he hoped to come up with a solution within three years.
In his interview with the Nikkei, Ghosn repeated his stance that shareholders on both sides of the partnership must be taken into consideration, while ruling out an outright merger he said always led to a loss of identity on one side.
Some analysts have suggested much closer ties, including a full merger, would reduce the inefficiency of running two separate companies, while others have said Renault should cut its stake in Nissan. Renault needs a third of Nissan to retain a controlling stake.
The Nikkei said Ghosn’s plan called for AvtoVAZ, Russia’s leading automaker and 25% owned by Renault, and Romanian group Dacia and South Korean Renault Samsung Motors -- both subsidiaries of the French automaker -- to move under the proposed umbrella.
Nissan and Renault have plans to take a combined stake in AvtoVAZ of at least 50% with Nissan taking more than half of the remaining 25%, Ghosn told Reuters last month.
Placing leading local firms under an enlarged group’s umbrella would be advantageous in expanding local operations while reducing expenses for building factories and establishing sales networks, the Nikkei said.
Nissan sold a record 4.08 million vehicles in 2010, with Chinese sales hitting 1 million for a first time and surpassing figures for Japan and the United States. Brazil, India and Russia are also key markets, the report said.
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First Published: Thu, Mar 31 2011. 03 26 PM IST
More Topics: Nissan | Renault | Auto | JV | Carmaker |