Rumors of Renault and Nissan taking over Russia’s AvtoVaz have been around for a while. We have a new one! The Nikkei [sub] picked up indications that Nissan and Renault will take a majority in AvtoVaz, Russia’s largest automaker. Except that The Nikkei doesn’t report it as a rumor. The headline “Nissan-Renault To Take Control Of Russia’s AvtoVaz” sounds quite definite. Sadly, it is not true.
In 2009, Renault had taken an interest in the Russian carmaker. The interest grew to slightly more than 25 percent. That didn’t take much money, but lots of guts, because AutoVaz was as good as dead at the time. Now, Russia’s car market is booming again. The Nikkei expects Nissan to pay around $1 billion for another 25 percent of AvtoVaz’s shares, bought from AvtoVaz shareholders Russian Technologies Corp., investment bank Troika Dialog and others. Combined, the Nissan-Renault alliance will own a controlling stake in AvtoVaz when the deal closes.
The Nikkei already hails the deal as creating “the world’s third-biggest automobile group, as their combined sales in 2010 came to 7.23 million units, beating Volkswagen AG.” The math may be right, but the logic is lacking.
- First, 2010 is over. One doesn’t get last year’s credit for this year’s M&A.
- Second, Carlos Ghosn and his spokespeople are always quick to stress that there is a Renault-Nissan Alliance, but that there is no Renault-Nissan company. Both are joined via cross shareholdings, and both have the same boss, Carlos Ghosn. But otherwise, they are separate. Technically, AvtoVaz will be owned by two car companies, Renault and Nissan.
- Third, Nissan and Renault always reported their sales separately. On the 2009 OICA list (the new one is not out yet), Nissan ranks #8 and Renault ranks #11. On the TTAC Top Ten of 2010, Renault ranks 10th and Nissan ranks 6th. Which came close, but wasn’t enough to unseat Volkswagen from its #3 position, if Nissan and Renault would consolidate their numbers. Which they don’t.
- Fourth, the deal is not at all as cooked as The Nikkei tries to make it appear.
Reuters, which has a sharp team of auto writers in Tokyo, says that the deal is far from final, and that negotiations “are likely to take a few more months.” Reuters’ sources say there is no deal ready to sign.
My sources give me the impression that Reuters’ sources are much higher qualified than those of The Nikkei.
The Nikkei jumped the gun again. It is understandable that the Nikkei wants to see one of theirs on the podium. But as a financial paper, The Nikkei should know the fine nuances between an alliance and a merger. The Nikkei should also know when someone wants to pump a stock.
Nissan’s stock closed down two percent today, in line with other Japanese automakers. The AvtoVaz stock jumped close to 10 percent today, fuelled by the rumor. Someone made a lot of money by feeding the Nikkei what the Nikkei eagerly eats up.