Active Stocks
Tue May 28 2024 15:59:27
  1. Tata Steel share price
  2. 174.85 -0.37%
  1. HDFC Bank share price
  2. 1,530.50 0.17%
  1. ITC share price
  2. 428.90 -0.60%
  1. State Bank Of India share price
  2. 830.90 -0.38%
  1. Infosys share price
  2. 1,466.20 -0.37%
Business News/ Markets / Stock Markets/  Renault to sell 5% stake in Nissan under share buyback program
BackBack

Renault to sell 5% stake in Nissan under share buyback program

Renault to sell 5% tranche of Nissan stake, company said in a statement on Tuesday. The stake will be sold as part of the company's share buyback program

Renault to sell 5% tranche of Nissan stake, company announced on Tuesday (Renault)Premium
Renault to sell 5% tranche of Nissan stake, company announced on Tuesday (Renault)

French carmaker, Renault on Tuesday announced to sell a tranche of around 5 percent of its stake in Japan's Nissan. The stake sale has come as a part of a rebalancing plan of the two companies' long-standing alliance, Renault said in a statement on Tuesday. 

The stake sale is expected to be worth around $824 million (€765 million), but will result in a capital loss of €1.5 billion, the French company said.

The sale will be implemented under the company's share buyback program announced by Nissan. The buyback program will be executed on Wednesday, the company added in its statement. Renault and Nissan finalised at the end of July the terms of a restructuring of their alliance after months of negotiations, aiming for a downsized, but more pragmatic and agile partnership. Renault Group and Nissan will continue to hold cross-shareholdings of 15%.

Nissan and Renault tie-up 

The partnership between Nissan and Renault was jolted in 2018 by the arrest of Carlos Ghosn, chairman of both companies. Since then, they have drifted apart and are now charting separate paths.

According to analysts, the announced stake sale will help Nissan in improving its situation in the stock market. The Japanese carmaker's shares are trading below the Tokyo Stock Exchange's guideline of maintaining a price-to-book ratio above 1.  Given the guideline, the buyback will “help improve the situation," said Bloomberg Intelligence analyst Tatsuo Yoshida.

Moreover, the cash will also boost, Chief Executive Officer Luca de Meo's efforts to get Ampere, Renault's electric-vehicle and software arm. The company is planning to split off the unit and list it as a separate public entity as soon as April or May. Nissan has also agreed to invest in Ampere.

Renault transferred its 28.4% stake in Nissan into a trust in early November to pave the way for a reduction of its holding. Company CEO De Meo said last month that Renault would begin offloading the stake “very soon" in early 2024. 

For Nissan, the buyback came under the value of cash and equivalents, which stood at $11 billion at the end of September, reported BB.

“It’s good news for the stock that Nissan will retire the equivalent of 5% of its outstanding shares," Yoshida added.

You are on Mint! India's #1 news destination (Source: Press Gazette). To learn more about our business coverage and market insights Click Here!

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less
Published: 12 Dec 2023, 01:37 PM IST
Next Story footLogo
Recommended For You
GENIE RECOMMENDS

Get the best recommendations on Stocks, Mutual Funds and more based on your Risk profile!

Let’s get started