Nissan to buy up to 15% stake in Renault EV unit under reshaped alliance By Reuters

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© Reuters. FILE PHOTO: A Nissan logo is seen in a vehicle during the press day at the Los Angeles Auto Show in Los Angeles, California, U.S. November 17, 2022. REUTERS/Mike Blake

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By Gilles Guillaume and Nick Carey

LONDON (Reuters) -Nissan and Renault (EPA:) on Monday unveiled details of their redesigned alliance, with the Japanese car maker committing to buy a stake of up to 15% in Renault’s electric vehicles unit Ampere.

The agreement, which also includes the previously announced reduction of Renault’s stake in Nissan (OTC:) to make the two more equal partners, aims to make the alliance freer and more balanced for the next 15 years, Renault’s CEO Luca de Meo said.

The lopsided relationship between the two car makers, which was deeply strained by the 2018 arrest of its architect and former chairman, Carlos Ghosn, amid financial scandal, had long been a source of friction among Nissan executives.

While Renault bailed out Nissan two decades ago, it is the smaller automaker by sales.

“I consider that what we have agreed is a much better set-up than what we have had in the last past few years,” de Meo told a presentation of the new-look alliance in London.

“We have now a new governance scheme that is much more straightforward, we can now operate like a normal company. Seen from Renault, (it) is about regaining some strategic agility without breaking necessarily the ties and the synergies that were existing.”

The size of Nissan’s investment or even a firm commitment to put money in the EV unit, Renault’s flagship business which is due to be listed on the market, has so far been unclear.

No financial details were disclosed on the valuation of the business on Monday, which some sources have indicated could be up to 10 billion euros. De Meo said the market would decide the value of the unit.

The alliance’s junior partner Mitsubishi Motors (OTC:) will also consider investing in Ampere, the companies said.

The pair had already announced that Renault would reduce its stake in Nissan to 15% from around 43% by transferring a 28% stake into a French trust.

Renault will have flexibility to sell the Nissan shares held in the trust but “it has no obligation to sell the shares within a specific pre-determined period of time,” the statement on Monday said.

When it does sell, Nissan will have a right of first offer.

The companies also aim for synergies from joint projects in Europe, India and Latin America, and will work together in the EV business, electronics and solid-state batteries.

Renault’s shares were little changed on Monday, down 0.2% by 0926 GMT.

The sweeping remake of the 24-year old alliance comes after months of intense talks complicated by concerns about the sharing of intellectual property as Renault sought tie-ups with companies outside the partnership, including China’s Geely.

Renault’s board approved the deal on Sunday night, according to a source. Nissan’s board also approved it early on Monday, the source said.

Investors and analysts will be looking for more clarity on the valuation of Ampere and how the trust in which Renault will place the bulk of its Nissan stake will operate.

CLSA analyst Christopher Richter said Renault’s brand is not seen as a strong one, so it may be tough for the French carmaker to raise a lot of money for Ampere.

“I wonder once this thing goes into the market how much money you would really raise, he said. “That’s why I think they’re going to push Nissan to pay too much.”

He said the revamped alliance could enable Nissan and Renault to work together on R&D, shared costs and a few shared products “with a little bit less rancor and acrimony between them.” But he noted that Honda and General Motors (NYSE:) have built a partnership that includes jointly developing lower-cost EVs together without any need for a capital relationship.