Nissan Seeking to Sell Trading Subsidiary for $1 Billion
Nissan is reportedly interested in selling a subsidiary responsible for the distribution of machinery, vehicle parts, and raw materials in an effort to further streamline the troubled company. While no announcement of deal has been made public by the ailing automaker, Bloomberg cited insider sources who claim the company has already invited firms to bid on the entirety of Nissan Trading.
According to those involved, a buyer could be selected as early as October. The sources also stated that the deal’s $1 billion target valuation includes assumed debt.
From Bloomberg:
Nissan Motor Co. is seeking to sell a wholly owned subsidiary that distributes vehicle parts and materials in a deal that may be valued at about $1 billion, as the struggling Japanese automaker seeks to slim down, people familiar with the matter said.
The company has invited private equity and trading firms to bid for 100 [percent] of Nissan Trading Co., according to the people, who asked not to be identified because the information isn’t public. The buyer may be selected by as early as October, according to the people. The target valuation includes assumed debt, they said.
While $1 billion is nothing to sneeze at, the trading unit generated revenue of 676.1 billion yen ($6 billion) in the fiscal year ending last March. Nissan probably could get more if it wanted, but times are tough. Presumably, it’s better to get a lump sum now. The automaker is also undertaking restructuring measures that include 12,500 job cuts, a measure it will hopes will transform the company into a leaner, more profitable manufacturer.
Nissan posted a dismal 12-month earnings report last March. Operating profit plunged 45 percent to 318 billion yen ($2.9 billion), while revenue fell 3 percent to about 11.6 trillion yen ($105 billion). Vehicle sales were down 4.4 percent globally. At the time, outgoing CEO Hiroto Saikawa claimed the company had hit “ rock bottom,” though he said he believed the company could turn things around after a couple years of hard work.
Saikawa has since resigned after admitting to receiving overpayment from an equity-linked remuneration scheme. He’s also vowed to repay the excess compensation, which he said was orchestrated by ousted and jailed former Renault–Nissan–Mitsubishi Alliance head Carlos Ghosn. Under the scheme, executives at Nissan earned bonuses tied to the automaker’s stock price. Saikawa claimed he originally presumed it was legal.
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They must be desperate. Sell off a spare parts subsidiary? Hey, my dealer wants $40 for a nylon webbing trunk net. It would be $5.99 in a Walmart blister pack. There's big money in them thar spar parts, son! But, hey, if you can't afford to pay for dinner, needs must and all that. A regional article I read on Nikkei or somewhere, written as opinion by some non-Japanese guru for the English-language version, claimed that Nissan's personnel cuts disproportionately affected overseas personnel, while the home crew would see far fewer job losses by ratio. Yup, you cut the foreign contingent running your overseas factories, sell off the family jewels like a spare parts business, continue to churn out underperforming tin cans, and soon enough you're back like 1999, almost bankrupt. And that's when Carlos arrived to sort this confused lot of provincially-minded managers out. They proved to be rubes, so he robbed them blind so they say, but he also picked Nissan up off the floor for the best part of two decades. Kind of six of one, a half-dozen of the other. This incarnation of Nissan looks set to go down the tubes in double-quick time. But at least they can blame someone else, even if not plausibly. Face-saving is just SO much more important than running a viable business.
Hopefully they take that billion and use it to leverage their way out of their alliance with Renault. Two's company and three's a crowd. I believe Nissan and Mitsubishi alone could make a real go of it. And doesn't Nissan already sell more vehicles globally that Renault?