Renault to propose joint holding company with Nissan: Nikkei

Under the proposal, both firms will nominate nearly equal number of directors to new company

TOKYO: Renault SA will propose to Nissan Motor Co a plan to create a joint holding company, which would give both firms equal footing as the French automaker seeks further integration with its Japanese partner, the Nikkei newspaper reported on Friday.

Under the proposal, both firms would nominate a nearly equal number of directors to the new company in which ordinary shares in both Nissan and Renault would be transferred on a balanced basis, the newspaper said without citing sources.

This would effectively dilute the stake held by the French government in Renault to around 7 to 8%, from its current 15%, it added. The new company would be headquartered in a third country, such as Singapore.

Renault plans to make the proposal to Nissan soon, the Nikkei said, having modified an earlier merger idea, which Nissan rejected on April 12.

Nissan declined to comment on the issue.

The report of the proposal comes as the outlook for the alliance - one of the world's top auto-making partnerships - has clouded since the arrest in November of its main architect, Carlos Ghosn, for financial misconduct.

It also comes as Nissan's financial performance struggles following years of focusing on volume sales over building its brand, particularly in the United States, its biggest market.

Earlier this week, the Japanese automaker slashed its profit forecast for the year just ended to its lowest in nearly a decade, citing weakness in its US operations.

Renault for years has been vying for a closer merger with Nissan, which it rescued from the brink of bankruptcy two decades ago. Ghosn had been working to achieve a deeper integration before his arrest on financial misconduct charges in November last year.

While the automakers have been consolidating many of their operations over the past decade, including procurement and production, many executives at Nissan have opposed an all-out merger with Renault.

Instead, Nissan has argued for a more equal footing with Renault, which holds a 43% stake in its bigger partner. Nissan holds a 15% stake in Renault.