Japanese carmaker Nissan Motor Co Ltd. has no plans to issue new stock to water down Renault SA’s stake in the company, a company spokesman said Tuesday. The announcement followed a source-based report by the Nikkei Asian Review Monday, which said Nissan is looking to raise its stake in Renault to 25 percent. However, the spokesman denied the report and said that the Japanese carmaker had "nothing more to announce."
Nissan’s board members had convened for a meeting Monday over fears that the French government -- Renault’s largest stakeholder -- was looking to double its voting rights in Renault in April under a recent law. As Renault owns about 43.4 percent stake in Nissan, shareholders have raised concerns that the Japanese company's independence could be dominated by a “third party”.
The Japanese automaker reportedly debated several steps, including raising its stake in Renault to 25 percent, to limit the French government’s interference. Under Japan’s corporation law, a foreign company would have to forego its voting rights if least a fourth of it were owned by a Japanese corporation. However, Nissan could stand to lose the support of the Renault’s majority in the resulting turf war.
A second option weighed by the Nissan board on Monday was to issue new shares to water down Renault’s stake in the company to below 40 percent. This would help Nissan gain voting rights on its 15 percent stake in Renault, giving it power to counter the French government's influence on Renault’s board.
Japan’s main government spokesman said Tuesday that the parties should try to reach a consensus through discussions. “The Japanese government will offer support if needed,” Chief Cabinet Secretary Yoshihide Suga reportedly said at a news conference.
Since Renault rescued Nissan from near-bankruptcy in 1999, the Japanese carmaker has outgrown its parent to account for two-thirds of combined vehicle sales and a bigger share of profit, according to Reuters.
The French government had last raised its stake in Renault in April, sparking a public power struggle with CEO Carlos Ghosn, who heads both carmakers. The two companies operate as one in personnel management, R&D, logistics, procurement and other business matters.
Nissan’s stock price was down about 2 percent at close on the Tokyo stock exchange Tuesday while Renault’s stock on the Euronext exchange rose 1.38 percent at open but pared some of its gains during morning trade.