Renault to lower its stake in Nissan to 15%

French automaker Renault will slash its stake in partner Nissan to 15% from 43%. The move is a part of a deal rebalancing the rocky alliance between the two firms.

The 15 percent stake will be the same size as Nissan's stake in its French counterpart. Renault Group cuurently holds 43% stake in Nissan. It will transfer 28.4 per cent of the Nissan shares it owns into a French trust, instead of selling it immediately. This is because the current market value is lower than that registered in Renault's accounts.

The companies will reportedly sign the new agreement next week following board approval from both sides.

The decision to reduce Renault's stake in Nissan is said to address a longstanding source of friction between the two. It is also said to help to remain competitive in an industry moving to electrification and automation.

Japan-based Nissan also said it would invest in Renault's new electric vehicle business Ampere. However, the size of the stake is yet not revealed. The automaker said that the new deal will "strengthen the ties of the alliance and maximize value creation for all stakeholders".

Renault in November last year said that it would split its operations in two businesses. It announced its new venture Ampere, and a separate subsidiary for petrol, diesel and hybrid cars that will pair up with China's Geely.

Both Nissan and Renault have been in the alliance together for over two-decades. The alliance first began in 1999, when Renault rescued Nissan from financial straits. 

In 2016, Nissan took a 34 percent stake in its struggling Japanese rival - Mitsubishi Motors.  But the union was destabilised by the 2018 arrest of Nissan boss Carlos Ghosn.

Both these automakers have been at constant friction with each other, especially after Nissan became far more profitable than Renault. According to analysts, the deal is an act of rebalancing  to build confidence between Nissan and Renault.

(With inputs from agencies)