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Nissan Moves To Block French Government Control Of Renault-Nissan Alliance Photo:

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Kez Casey | Dec, 04 2015 | 1 Comment

While the Renault-Nissan Alliance has thus far been a successful enterprise, having certainly helped pull the Japanese manufacturer back from the brink, recent moves by the French government to increase its voting rights has seen Nissan attempt to block the move.

Under the existing agreement, Renault effectively controls both sides of the alliance, but in April this year the French government increased its stake in Renault from 15 percent to 19.7 percent without informing Renault and Nissan’s CEO.

Similarly, under French 'Florange Law' the government gains an increased voting right, with any shareholder having had registered shares for more than two years gaining double the voting rights come 2016.

Nissan, which has now expanded in scope beyond Renault (compared to the beleaguered state it was in when the alliance was formed in 1999), has drawn up a proposal to lessen Renault’s control of the Japanese firm.

Under the current operating arrangement, joint manager and CEO, Carlos Ghosn, has left Renault’s legal control of Nissan dormant, but with rumours circulating about 61 year-old Ghosn’s possible retirement in coming years, Nissan is concerned his successor may enact control.

The existing structure between the two companies sees Renault able to name Nissan’s top three executives, while Nissan holds a 15 percent non-voting stake in Renault, Renault holds a 43.4 percent full-voting share of Nissan.

At its formation the ‘strategic pertnership’ between the two companies was unique in the automotive realm, being neither a merger nor aquisition. By consolidating engineering and development resources, and sharing platforms and components both companies have been able to benefit from enhanced economies of scale.

In a report from Automotive News, an unnamed source from Nissan’s labour union described the French government’s move has having to potential to destabilise the Renault-Nissan Alliance.

Previously the French government has also objected to a full merger between the two companies, also stating that it would sell back its increased share once market conditions improved, but hasn’t given a timeline for when that might occur.

MORE: Renault-Nissan Alliance News

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