French State Opposes Power Shift in Renault-Nissan Alliance

The French government is emerging as the sole major shareholder in Renault SA to oppose a proposal to rebalance ownership and voting rights in the carmaker’s highly successful alliance with Nissan Motor Co., the Financial Times reports.

When the partnership was launched 16 years ago, Nissan was near bankruptcy. Renault took control of the Japanese company with a 43% stake. Nissan received a 15% non-voting share in Renault.

Today the Japanese company generates about seven times as much revenue as Renault, and it contributes two-thirds of the alliance’s profit. Yet Nissan continues to have little clout in shaping the venture's policy.

Last April the French government strained the relationship by secretly hiking its stake in Renault from 15% to 19.7%. The move enabled the government to thwart an effort by Renault’s board to avoid France’s so-called Florange law. The statute, which is intended to thwart corporate raiders, will grant long-term shareholders of French companies double voting rights when it takes effect in April 2016.

Sources tell FT the law will give the French state nearly 33% of voting rights in Renault if the state retains its current stake, or 28% if it reduces its holding as it has promised to do. FT says the former scenario could trigger a potential government takeover of Renault.

In either case, Nissan describes the rising influence of the French government over Renault’s governance as “a big issue.” Internal Nissan documents propose a rebalanced alliance in which the two carmakers would own 25%-35% of each other, the FT says.

But French economy minister Emmanuel Macron, who masterminded the government’s increased stake in Renault, strongly opposes any alterations.

“We want to maintain the balance of this alliance,” Macron tells reporters. He declares the venture “must not be destabilized by changes, adjustments or governance changes that could also lead to conflicts of interest.”