Further Renault-Nissan Integration Blocked By French Government In Power Play

An attempt to bring further integration within Renault-Nissan resulted in the French government tightening its hold on Renault against CEO Carlos Ghosn.

The move by the government Thursday to block the integration effort leaves Ghosn with the choice to either negotiate or fight for integration, Reuters reports. The CEO has long desired to give Nissan more status in the alliance to match its sales and profit, while the administration of French president François Hollande wants to increase its influence upon the French companies it owns, including Renault.

Using a rule allowing the government to double its voting rights on its holdings over two years of age — one companies like Renault-Nissan can choose to opt-out to following — Economy Minister Emmanuel Macron announced the government made a purchase of €1.2 billion ($1.34 billion USD) in Renault shares, increasing its stake from 15 percent to 19.7 percent in order to block the opt-out vote. Just 60.5 percent of shareholders supported the opt-out vote, but a two-thirds majority was needed to make it stick.

Though Macron claimed the move wasn’t a power grab, government officials and company insiders state the move occurred due to the French government’s fears Renault would become more like Nissan, which now accounts for two-thirds of combined sales and a bigger share of the profit shared by the alliance.

With the opt-out vote blocked, the CEO may counter the French government by restoring Nissan’s voting rights via buying back Renault’s shares in the Japanese automaker and/or creating new shares with a capital increase.

Before pulling the trigger on restoration, though, Ghosn may try negotiating for integration with Nissan taking the helm. The government may not be so interested, however; Macron stated that he saw no reason for Nissan to restore its voting rights, and would hold the line “to the end.”

[Photo credit: Norsk Elbilforening/ Flickr/ CC BY 2.0]