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REFILE-Japan accepts greater French say in Renault-Nissan - sources
October 20, 2015 / 3:40 PM / 2 years ago

REFILE-Japan accepts greater French say in Renault-Nissan - sources

(Adds dropped word “percent” in last paragraph)

By Laurence Frost and Maki Shiraki

PARIS/TOKYO, Oct 20 (Reuters) - France has won Tokyo’s cautious acceptance of a move to bolster its influence over Renault, sources familiar with the matter said, despite Chief Executive Carlos Ghosn’s warnings that Paris’s greater clout imperils the carmaker’s alliance with Japanese partner Nissan.

Economy Minister Emmanuel Macron, who raised France’s Renault stake from 15 to 19.7 percent to force a doubling of its voting rights through an April shareholder meeting, discussed the manoeuvre in an exchange of letters with his Japanese counterpart and again during a Tokyo visit earlier this month, government officials with knowledge of the matter said.

Although described as temporary, the increase enabled France to block Ghosn’s proposed opt-out from a law granting double votes to long-term investors and will permanently increase its voting weight when it enters force next April.

It drew stern warnings from 43.4 percent Renault-owned Nissan - also headed by Ghosn - that the power grab would upset the 16-year-old alliance’s delicate Franco-Japanese balance. Nissan owns a reciprocal non-voting 15 percent of Renault.

In a June 1 reply to Macron, however, Yoichi Miyazawa, then minister for economy, trade and industry, described the French move as a business decision “in compliance with the due process of law”, a person familiar with the matter told Reuters.

Two other sources in Paris and Tokyo confirmed the exchange with Miyazawa, who was replaced in a government reshuffle earlier this month.

“We have not sensed any problem for the Japanese government,” a French source said, adding that further discussions with Prime Minister Shinzo Abe’s administration during Macron’s Oct 3-5 Tokyo visit had struck “the same tone”.

Renault-Nissan and the French and Japanese economy ministries all declined to comment.

French President Francois Hollande’s Socialist government is using the so-called Florange law to wield more power through minority holdings in companies from Air France-KLM to Engie. But the manner of its imposition at Renault is a challenge to Ghosn’s authority and autonomy.

Since 1999, when Renault took a controlling stake in Nissan and rescued it from near-bankruptcy, the Japanese carmaker has outgrown its parent to account for two-thirds of combined vehicle sales and a bigger share of profit.

In the wake of the government’s April stake increase, some observers expected Ghosn to cut Renault’s Nissan holding - a move he has tried before that could restore voting rights to Nissan’s Renault shares, offsetting French influence.

That idea has resurfaced in discussions between Renault and Nissan on deepening their alliance, the Nikkei business daily reported earlier this month.

Concern in Tokyo over France’s intervention may yet be aroused by the government’s delay in selling off the additional 14 million Renault shares purchased in April.

In his letter to Macron, the Japanese minister also emphasized that the Renault-Nissan alliance was built on trust, according to the same sources, and noted that the French stake increase had been undertaken “on a temporary basis”.

Options purchased by France to ensure a minimum resale price on the Renault shares - down 22 percent since the shareholder meeting - are now being settled for cash as they expire, the state holdings agency said earlier this month, leaving its raised 19.7 percent stake intact until an unspecified later date. (Additional reporting by Gilles Guillaume; Editing by Mark Potter)

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