The French government’s move to expand its voting control at Renault is roiling the delicate balance of power in the car maker’s partnership with Nissan, one of the auto-industry’s most successful cross-border alliances, reports The Wall Street Journal.
Carlos Ghosn, chief executive officer of Renault and Nissan, said the Japanese firm’s board of directors will meet this week to discuss the French state’s maneuvers to double its voting rights in the French car maker. France wants to lift its stake to 20%, effectively giving it double voting rights in the auto maker. Renault directors oppose the state’s great clout.
The Renault-Nissan Alliance is a development, procurement and production alliance. Each company has its own board and publicly traded shares. But there are cross shareholdings that favor the French car maker.
Renault forged the alliance when it bailed out a struggling Nissan in 1999. The French auto maker’s 43.4% stake in Nissan comes with voting rights. Nissan owns 15% of Renault but has no voting rights.
People familiar with Nissan management’s thinking say that the balance between the two companies isn’t just determined by cross-shareholdings or size of sales and profit. For instance, they say three of the four top posts beneath Mr. Ghosn in the alliance are now filled by Nissan executives.
Earlier this month, the French government said it would spend up to 1.23 billion euros ($1.3 billion) to buy more shares in Renault. The move would allow it to veto a pending resolution to maintain a one-share, one-vote corporate governance system, and effectively gain outsize clout in the company. The resolution will be voted on at Renault’s annual shareholder meeting on April 30th.
People familiar with the matter said the government’s decision to increase its stake caught Renault’s board by surprise. They also said the French government’s potentially expanded influence over Renault has irked Nissan.
A Renault-Nissan alliance spokeswoman declined to comment.