Report: Ghosn Was Planning Renault-Nissan Merger

Carlos Ghosn, chairman of both Renault and Nissan, was working on a plan to merge the two companies before his arrest this week, sources tell the Financial Times.

Three sources say Nissan’s board expected the deal to be presented within months. Now Ghosn faces the result of an internal Nissan probe that claims he underreported his compensation and may have improperly used corporate assets.

FT says Nissan’s directors fiercely oppose any such move and have been looking for ways to block it. Renault already exerts considerable power over Nissan, in which it holds a 43% stake. Nissan owns 15% of Renault but holds no voting rights.

Ghosn favors a merger, which he had said would make the Renault-Nissan-Mitsubishi alliance “irreversible.” But sources tell FT that relations between Ghosn and Nissan CEO Hiroto Saikawa have soured as the likelihood of a merger proposal grew.

The newspaper says Ghosn was increasingly dissatisfied with Nissan’s financial performance, especially its sagging margins in the U.S. and slowing sales growth in China. At the same time, Nissan has been hit with multiple scandals in Japan regarding improper vehicle safety inspections and doctored fuel economy reports.