By on June 10, 2019

Nissan and Renault’s strained relationship is well documented at this point. And yet the scribes keeping tabs on the matter must now dip their quills in fresh ink, as a new chapter is ready to be written. Following the arrest of Carlos Ghosnindustrial scandals, a subpar earnings report, and more headaches, Nissan intends to adjust its corporate structure while passing some internal reforms.

However, Renault Chairman Jean-Dominique Senard recently issued a letter to the automaker saying the company would abstain from voting on the issue. As Nissan’s adoption of the reform requires two-thirds approval, Renault could easily block the plan with its sizable stake in the company. Nissan politely calls the automaker’s stance “most regrettable,” but execs in Yokohama must be seething. 

On the surface, this looks like payback for Nissan not supporting the French automaker’s proposed merger with Fiat Chrysler. While Nissan did abstain from voting on the plan and seemed to have little say in talks, FCA ultimately said it was the French government that stymied the deal.

According to Reuters, Senard’s letter was primarily concerned with the breakdown of representation within new boards. “Renault’s rights as 43.4 [percent] shareholder of Nissan need to be fully recognized and, at a minimum, one or two directors proposed by Renault should be members of each of the three committees,” the document read. “As currently proposed, this does not seem to be the case.”

From Reuters:

A Renault source said Senard’s letter was motivated by concern about Renault’s under-representation on the new Nissan board committees being introduced following the arrest of Ghosn, who is now awaiting trial and denies the financial misconduct charges against him.

“It’s not a final abstention, and Renault’s position can still change,” the source said. “As things stand, Renault has not been assured of appropriate committee representation as Nissan’s main shareholder.”

Renault had yet to receive specific details on the proposed composition of each of the committees, another source with knowledge of the issue told Reuters.

A Nissan source said Renault CEO Thierry Bollore had expressed a desire to sit on new Nissan committees to oversee executive nominations and compensation, and a planned corporate governance auditing committee.

“Nissan has received a letter from Renault indicating intention to abstain from voting,” Nissan said in a statement, “Nissan finds Renault’s new stance on this matter most regrettable, as such a stance runs counter to the company’s efforts to improve its corporate governance.”

Earlier this year, the Japanese automaker appointed a group from outside the company to advise on the formation of the three committees. Under the current proposal, Renault directors would be eligible to serve on the nominations committee while being prohibited from joining the compensation and audit boards. Having sought additional autonomy for years, Nissan has been consistently opposed to a merger with Renault on those grounds. Nissan CEO Hiroto Saikawa said the companies would have to confront the issue eventually.

“We are preparing for the shareholder meeting and will discuss necessary issues at the appropriate time. If there are differences of opinion, then I’d like for those to be discussed,” he told the Japanese media.

Meanwhile, Renault and FCA are hunting for ways to salvage their failed merger plan. According to Reuters sources, Nissan is expected to pressure Renault to significantly reduce its stake in the company.

[Image: Anton Watman/Shutterstock]

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8 Comments on “More Drama: Renault to Block Nissan’s Corporate Reform...”

  • avatar
    SCE to AUX

    This dysfunctional family won’t stay together much longer.

  • avatar

    Other reports I have read today said Senard was in favor of the changes at Nissan, before he opposed them.

    This 180 by Senard is another datapoint in the developing theory that the intention from the start of the merger proposal was to break the alliance and Renault divesting it’s interest in Nissan. Divesting Nissan is the only way a Renault/FCA merger would pass US anti-trust scrutiny.

    It was reported last week that the investment bankers putting the deal together intended from the start to essentially railroad Nissan. It was the French government’s insistence that Nissan, as a Renault stakeholder, have a say in the merger that precipitated FCA breaking off negotiations.

    It is routine for investment bankers to arrange a fat payday for the top honchos of companies, to assure their cooperation in making a merger happen, so the bankers can have an even fatter payday. In this deal, FCA shareholders were to receive a fat special dividend, an incentive aimed directly at John Elkann and the other beneficiaries of Exor, which holds close to 30% of FCA stock, and 42% of the voting rights. It looks like Senard is also in line for a multi-million payout, if the merger can be made to happen, as he has changed his mind and is trying to throw more sand into the alliance.

    imho, the huge synergies that are being claimed for this merger only exist in the fevered minds of the bankers. The synergies are between Nissan and Renault as they both operate in the same market segments. There are near zero synergies between Renault and FCA. FCA’s most profitable products are so large and fuel hungry they are only relevant in North America.

    If the alliance is successfully broken, what will happen after the merger will be that Renault will be starved of product, just as Fiat is being starved, while money is bled out of Renault to fund pickup and large SUV development in the US. Eventually, due to falling volumes, Renault will fall into the red and FCA will be looking for a way to unload it. I figure the French government will pressure PSA to pick up the pieces, as Peugeot did with Citroen and Simca, to save French jobs.

    • 0 avatar

      >>Renault will be starved of product, just as Fiat is being starved, while money is bled out of Renault to fund pickup and large SUV development in the US. <<

      FIAT was and is doing the bleeding, by most accounts they are a crap company that has been using Detroit profits to make FIAT products few wanted. The fact is that US pickup and SUV development was was delayed as Chrysler was bled to finance FIAT junk and the abortive Alfa brand.

      Somehow GM saved FIAT awhile back and wound up paying FIAT $3 billion before GM went bankrupt. Just how was GM snookered into saving a junk company.

      The American SUV's and pickups have been wildly profitable while FIAT should have been closed years ago and rationally would have but for its presence in Italy and the importance to the Agnelli's fortunes.

      • 0 avatar

        I agree. The Grand Cherokee is prehistoric and could be making more money for FCA by itself than they’ll ever see in return for keeping Alfa Romeo around.

        • 0 avatar

          The current JGC IS old, the WK2 having been introduced in Sept 2010 as the 2011 model.

          But it continues to sell and as long as FCA and retailers like Perkins, LHM, and others continue to pump them out with discounts of $3K, $4K, $5K or more on the hood, the GC remains a hell of a deal, and all that tooling has been paid for several times over.

        • 0 avatar

          For FIAT he goal was to use American money to to develop Italian brands. Italian (or German) company will use America or American companies as cash cows. FIAT starved Chrysler and Dodge to death and as result is going to kill both iconic American brands and keep RAM and Jeep as long as they bring cash without new development and in the end will kill them too.

          • 0 avatar

            “FIAT starved Chrysler and Dodge to death ”

            Look at the model line shrink. Look at last year’s 5 year plan for revenue by brand.

            The pie chart in the 5 year plan shows revenue from Alfa, Maserati, Jeep, Ram and commerical vehicles growing from 65% to 80% of revenue, while the segment attributed to Fiat, Chrysler and Dodge is about cut in half.

            Fiat is being starved along with Chrysler and Dodge, because Ram and Jeep provide a better ROI,

      • 0 avatar

        “FIAT was and is doing the bleeding, by most accounts they are a crap company that has been using Detroit profits to make FIAT products few wanted.”

        The Fiat 500 and Panda own the A segment, each selling more than twice as many as the VW Up! and Renault Twingo, but Fiat has announced that the long promised next gen 500 will be electric only, and the old gen 500 will be wound down. More Fiat 500Xs are sold in Europe than Jeep Renegades. The 500L has lead it’s small MPV segment for years.

        Rather than compete in the B segment, Fiat dropped the Punto and withdrew. Rather than compete in the C segment, Fiat has announced they will make no further investment in the Tipo and let it wind down.

        While one Fiat model after another is being wound down, FCA pours money into models with higher transaction prices and higher gross margins: Alfas, Mazeratis, Rams and Jeeps.

        Will a company with FCA’s MO, keep investing in Renault models like the B segment leading Cleo, or Megane, or Talisman, or will they meet the fate of the Dart and 200? Will FCA continue to invest in Renault SUVs, like the very popular Captur and Duster, or let them rot like the Dodge Journey, while all the SUV money goes into Jeeps?

        The French government was very wise to be concerned about the status of Renault factories and employees. All they need to do is see the empty Fiat factories in Italy, while one new Jeep model after another is introduced, and western hemisphere Jeep and Ram plants run at capacity.

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