Renault, Nissan Near Deal on Alliance Shake-Up

The original alliance, cemented under the leadership of former auto titan

Carlos Ghosn,

catapulted the two companies into the top ranks of global auto makers. It allowed both to remain largely independent, but share key technology and platforms, enabling them to punch above their weight in the industry.

However, the alliance has been plagued by rivalry and suspicion, which heightened considerably in the period before and after Mr. Ghosn was ousted as chairman of the two companies. His arrest in Japan on charges of financial crimes triggered a period during which executives and board members openly fought each other. Mr. Ghosn avoided a trial by fleeing Japan. He denies the Japanese charges and lives in Lebanon, where he is protected from extradition.  

The partnership’s operating board—which includes the chief executives of Renault, Nissan and

Mitsubishi Motors Corp.,

which had more recently joined the alliance, plus Renault Chairman

Jean-Dominique Senard

—met Thursday by video link and agreed on the timeline for the announcement. Nissan’s independent directors signaled their support for the deal last week, according to people familiar with the matter. Nissan and Renault will now convene their full boards in the coming days to vote on the deal.

The deal involves Renault reducing its 43% stake in its Japanese partner to 15%, according to the people familiar with the matter. The shares to be disposed of will be put into an independent financial trust and sold at a later date.

In exchange, Nissan has indicated it will invest in Renault’s electric-vehicle business, which the French auto maker aims to take public this year, the people said. It is unlikely that Nissan will state the size of its investment by the time of the announcement, slated for Feb. 6, the people said. Negotiations on that point will continue in the coming months.

Alongside the deal, the companies plan to announce a handful of projects in locations such as India and Latin America, according to the people familiar with them. They are also finalizing an agreement that would see each company name two directors to the other’s boards.

Executives from Renault and Nissan have been shuttling back and forth between Japan and France hammering out the details of the deal for months.

Nissan has long chafed at a partnership it viewed as uneven, with Renault holding outsize influence courtesy of its controlling stake in the Japanese car maker. Renault executives, meanwhile, thought they weren’t getting enough return on their stake, people familiar with their thinking have said, and that the funds unlocked by selling down its shareholding would be better spent elsewhere.

The companies booked a high-end hotel in London to announce the deal in early December, but those plans were canceled just days before, people familiar with the matter said.

While the broad outlines of the deal have been agreed upon for months, one sticking point has been jointly developed intellectual property. The French car maker in October announced plans to split itself into several divisions, putting its core business making conventionally powered cars into a joint venture and detailing plans for a separate stock-market listing of its electric-vehicle division. These entities will be open to outside investors.

Discussions on how some Nissan IP will be protected if transferred to Renault’s new EV business are ongoing, the people said. Nissan hasn’t allowed for the sharing of its e-Power hybrid technology within Renault’s combustion engine business, which is now slated to be part of a joint venture with China’s

Geely Automobile Holdingss Ltd.,

the people said.

Despite these issues, the deal has got a big political boost in Paris. The French state is Renault’s largest shareholder, with a stake of more than 15%. It had said in the past that it wouldn’t support Renault selling its stake in Nissan without a deal to strengthen the companies’ alliance.

In January, though, French President

Emmanuel Macron

assured Japanese Prime Minister

Fumio Kishida

that France wouldn’t oppose a rebalancing of the alliance. In the days that followed, French Finance Minister

Bruno Le Maire

reiterated those assurances in a letter to his Japanese counterpart.

Write to Nick Kostov at [email protected] and River Davis at [email protected]