Nikkei All Messed Up: No Nissan-Renault Holding Co.

The Nikkei must have had too much sake at Yokohama’s famous seaside watering holes after they finished an interview with Nissan and Renault CEO Carlos Ghosn yesterday evening. Their reports of an imminent merger of the two (and sundry others) under a joint holding company turn out to be utter nonsense, or rather “a misinterpretation of a wide-ranging interview,“ as Rachel Konrad, Director of Communications of the Renault Nissan Alliance, tells us in more elegant words.

“Carlos Ghosn has frequently stated to the media, investors and others that the corporate structure of the Renault-Nissan Alliance would continue to evolve — as it has for the past 12 years. However, there are no plans to form a single holding company for both Renault and Nissan,” says Konrad. “Mr. Ghosn said that the corporate structure of the Renault-Nissan Alliance would remain dynamic. Again, there are no plans to create a holding company, and in fact Mr. Ghosn did not say or imply that Renault and Nissan are ‘leaning toward establishing a holding company’ as the publication erroneously reported.”

Nissan’s stock was halted at the Tokyo exchange after the report. One indication that the story was wrong: The stock opened higher after trading resumed. Usually diluting news like these tend to send a stock down. The Nikkei [sub] mentioned its boo-boo with a meek little sentence, shifting implied blame to Nissan: “The Nikkei reported before the bell that Nissan is considering establishing a joint holding company with French partner Renault SA. But Nissan said the same day it has no such plans.”

TTAC came into possession of the transcript of yesterday’s interview. Read the pertitent part and see for yourself. The Nikkei did read something into Ghosn’s statement that could be there, but isn’t. Sure, Ghosn baited them a bit. But before biting, they should have revisited the movie that was required watching back in J-school. “Just one more thing.”

Either that, or that other movie, “Lost in Translation.” But that was shot in Shinjuku.

Transcript of Nikkei interview with Carlos Ghosn

Q: “In the Alliance, you are partnering with various government entities. Is there any possibility of changing the governance system in the future?”

Ghosn: “Yes, there is a possibility, an evolution of the governance, which is normal. We have an organization that has served us well for the last 11 years. There are a lot of demands coming, particularly from Renault shareholders, saying, “Renault owns 43% of Nissan. Why do you need all…?” It’s a legitimate question.

I personally do not favor mergers. I don’t think mergers work, so I would discard it. But studying an evolution of our governance that allows the different companies to operate autonomously and to have their own goals, identities and headquarters – this is something that’s totally possible. It’s too early today. We need to be very cautious because we have something that has been working very well for 11 years. We want to be very prudent if we make changes [to assure] that they continue in the same direction. But it’s a legitimate question. It will have a very thoughtful answer.”

Q: “So, simply put, this will not decrease the capital participation in Nissan?”

Ghosn: “When we review the governance, we’ll review the whole governance. Shareholding will be part of it, but it won’t be the only part of it. I think it’s too early today to say what the consequences will be because we’ll need to consult with the shareholders of Renault and Nissan and make sure everything is being done in their own interests and that whatever we do will support the operations and be well accepted by employees. Pride, sense of belonging, sense of identity. It’s a complicated endeavor, but I think we have to do it. I don’t think we can be stuck in an organization that served us very well for the last 11 years but, little by little, is showing its limits. So you can expect within the next two to three years to see some kind of evolution coming.

But we’ll be very prudent.”

Q: “So you mean you will not converge on one conclusion immediately?”

Ghosn: “No, I’ll need to consult a lot of people. We have different stakeholders. Because we have been so successful for 11 years, operating something that is very harmonious, we will not take any risk. But there will be an evolution of the Alliance.”