After long hand-holding and necking, Daimler and Renault finally seem to progress to third base. The Financial Times reports that the French and the Germans “are in the final stages of wide-ranging strategic partnership talks that would involve the German and French car makers taking ‘symbolic’ minority stakes in each other.”
The “symbolic” cross shareholdings will most likely be a bit more than 3 percent, “just above the threshold whereby shareholdings had to be made public,” said a source to the FT.
A senior industry executive said that the two car makers “don’t want to marry.” They want to get in bed with each other nonetheless, so “it makes sense to underpin that with a symbolic stake.” Call it the high finance version of friendship rings.
The real tie-up is somewhere else: Daimler and Renault want to cooperate in a number of fields, from a small car platform to common components for light trucks and electric cars.
Renault’s Japanese partner Nissan wants to be part of the tie-up. “Nissan Motor Co. has entered negotiations with Daimler AG to procure large engines and cooperate in the development of environmentally friendly vehicles, said The Nikkei [sub] a few days ago.
Nissan may buy large diesel engines and V-8 gasoline engines from Daimler. In return, Daimler will get electric cars and batteries from Nissan.
Both companies aren’t necessarily hard up for money (they have rich sugar daddies in France and Saudi) but a capital tie-up make it easier to “go deeper” into areas such as research and development and purchasing, one person familiar with the talks said: It’s easier to exchange and keep secrets if you exchange stock certificates and board seats.