Renault Cedes to French Government in Power Struggle

Renault SA’s board has largely capitulated to the French government to end an eight-month power struggle over control of the carmaker and its alliance with Nissan Motor Co.

Renault’s board accepted the state’s previous offer to limit its voting rights in return for leaving the basic structure of the carmaker’s alliance with Nissan unchanged. That means Nissan will retain its 15% stake in Renault but won’t gain the voting rights in the partnership it had sought.

The deal caps the voting rights of the government, which owns 19.7% of Renault, at 20% or less for routine decisions voted on by shareholders. It also will create a contract agreement that Renault won’t interfere with the governance of Nissan, in which it holds a controlling 34% stake.

But Renault says the accord allows the government to receive double voting rights on April 1 under France’s new Florange law. This year’s power struggle was sparked in April by the state’s secretive maneuvering to increase its stake in Renault, thereby ensuring the double-vote outcome.

Both carmakers worried that the government’s power grab would enable France to interfere with their business decisions, especially those involving jobs and operations in the country.

The agreement preserves the state’s ability to exercise unbridled voting rights on board appointments, dividends, deals that would shed more than 50% of Renault’s assets, any attempt by Nissan to increase its stake in the alliance and significant shifts in the Renault’s ownership among the company’s other shareholders.