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France will accept smaller Renault stake in Nissan: minister

Le Maire says Paris will not force a merger, but alliance must continue

France's Finance Minister Bruno Le Maire speaks to the Nikkei Asian Review in Tokyo on June 10. (Photo by Arisa Moriyama)

TOKYO -- Paris would be open to Renault reducing its 43.4% stake in Japanese partner Nissan Motor, the French Finance Minister Bruno Le Maire said on Monday, as he sought to calm the rising tensions that threaten the two companies' global carmaking alliance.

The minister also signaled that Paris would not push a controversial merger of Nissan and Renault to cement the alliance. "If a merger is a problem for our Japanese partners we will not force it. We will find another solution" he said. Nissan earlier this spring strongly rejected a merger proposal from Renault.

In an interview with the Nikkei Asian Review, the minister emphasized the French state's determination to preserve the 20 year partnership between Renault and Nissan, which, with Mitsubishi Motors, is one of the world's biggest car producers. 

"If we have to cut Renault's stake in Nissan to have better governance -- one that is more efficient, that takes faster decisions -- we are open to that," Le Maire said. But, he added, as a 15% shareholder of the French carmaker, the state "would never accept the alliance being called into question."

Le Maire's comments were designed to reassure Nissan, which has long agitated for a rebalancing of power between the two companies. Nissan, which owns just 15% of Renault but has no voting rights, is barred from increasing its stake except under certain conditions.

But the minister indicated that the French state had not given up its hopes of permanently cementing the partnership so that it would become "irreversible" -- a goal revealed by the French state in early 2018, which sparked deep concern and suspicion inside Nissan about a government-led French takeover.

"The government's priority has been to reinforce the alliance between Renault and Nissan... which has delivered very good results for [both companies]," he said. "It has allowed them to take the lead in electric vehicles."

It was up to the boards of the companies to find the best way to bolster the alliance, he said, but as Renault's reference shareholder it was also the French state's right to insist on a strategy.

Le Maire was in Tokyo to set out the French government's position after the debacle of Renault's failed attempt to merge with Italian-American automotive group, Fiat Chrysler Automobiles. Nissan had been kept in the dark by its French partner about the discussions -- even though its 15% stake in Renault would have been halved under the proposal. 

In a statement last week, Nissan CEO Hiroto Saikawa raised doubts about his company’s continued participation in a longtime alliance with Renault if the merger went through. 

A deal would "significantly alter" the alliance's structure, Saikawa said. "This would require a fundamental review of the existing relationship between Nissan and Renault," he added. 

The talks finally collapsed after the French government delayed a board vote on the deal, saying it wanted explicit support from Nissan.

Le Maire said it was important that there was no misunderstanding between the French and Japanese partners. "If we had accepted a merger between Renault and Fiat without Nissan associated with this decision... without doubt the Japanese partner would not have understood the French state's decision," he said. The state's priority was to ensure the success of both companies in the face of rising competition and the electric vehicle revolution which will require substantial investment. 

Since the merger talks collapsed, however, relations have been further strained by revelations that Renault plans to block Nissan's corporate governance overhaul at the annual meeting later this month. It is seeking greater representation on Nissan's board committees. 

The alliance has been under severe strain since the arrest of its former chairman Carlos Ghosn for alleged financial misconduct last year. Ghosn, who denies the charges, held the partnership together by wielding significant power as head of both Nissan and Renault.

Le Maire reiterated his comments to French media this weekend that the state could consider reducing its stake in Renault, if it led to a "more solid" alliance between the Japanese and French firms.

Before the collapse of the merger plan between FCA and Renault, Le Maire said in a statement last week that the terms of the deal met only three out of four of the government's conditions, while explicit support from Nissan was still missing. 

The French government had reportedly sought assurances over jobs and investment, a seat on the merged entity's board, and for the operational headquarters of the enlarged company to be in France.

FCA blamed French politics for scuttling the deal. "It has become clear that the political conditions in France do not currently exist for such a combination to proceed successfully," said FCA in its news release when it withdrew from the $35-billion merger proposal the same day, which would have created the world's third-biggest automaker behind Japan's Toyota Motor and Germany's Volkswagen. 

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