Renault offers concessions in bid to revive Nissan partnership

These include reassurances to help ease the Japanese car maker's concerns over shared intellectual property

A Renault R5 hybrid at the Brussels Motor Show. EPA

Renault is offering some concessions to Nissan Motor as it tries to clinch a deal to reboot a more than two-decade alliance, according to sources.

Nissan’s independent board of directors are due to meet early next week to consider several proposals by Renault, said the people. These include reassurances to help ease Nissan’s concerns over shared intellectual property, one of the sticking points in the negotiations, the people said.

There’s also acknowledgment on Renault’s part that Nissan may invest less than hoped in the French car maker’s electric vehicle business Ampere that it’s currently carving out, the people said.

Renault sees potential for a roughly €10 billion ($10.8 billion) valuation for the unit and is planning an initial public offering for the second part of the year, depending on market conditions.

Nissan doesn’t agree with this valuation level and made no decision yet on Ampere, said the people. It may end up buying less than the originally planned 15 per cent stake, they said.

While Renault is making last-mile efforts to clinch the deal, the concessions remain minor and the car maker’s main focus is still execution of its strategic plan and profitability.

Those efforts are paying off, with the stock up almost 75 per cent since hitting a low on March 8, when Renault was under pressure because of a Russian business it no longer owns.

Renault is in the middle of a complex split of its business into five different units, while negotiating with Nissan ways to rebalance an alliance with lopsided capital ties that has become a source of friction over the years.

While Nissan chief executive Makoto Uchida wants to move quickly with the agreement, the company’s independent directors are worried about the implications for the Japanese company from Renault’s reorganisation, which has delayed the deal, several people said.

There’s also concern over Renault’s legacy combustion-engine business partner, China’s Zhejiang Geely Holding, gaining access to joint technology.

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The talks between the two companies and junior alliance partner Mitsubishi Motors got new impetus earlier this week when French President Emmanuel Macron met with Japan’s Prime Minister Fumio Kishida to reassure him that the French government backs Renault’s rebalancing plan and won’t seek a Renault-Nissan merger.

Past pressure for a merger from the French government, Renault’s most powerful investor with a 15 per cent stake, is one of the reasons relations between the two companies became fraught over the years.

The rebalancing will mean Renault selling 28 per cent of Nissan over time so that they each end up with equal, 15 per cent holdings in the other company.

As part of the proposals currently under discussion, Nissan won’t allow sharing of its e-Power hybrid technology within Horse, an entity Renault is creating for its legacy combustion-engine assets, the people said. Horse will be an equal partnership with Geely.

Renault chairman Jean-Dominique Senard and chief executive Luca de Meo are expected to attend in person the next alliance operating board meeting in Japan at the end of the month, the people said.