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Renault Chairman Pledges to Restore ‘Damaged’ Nissan Partnership

June 12, 2019
Senard blamed the French government, and not Nissan, for derailing a “remarkable and exceptional” project that he said would have generated positive synergies and value rarely seen in any other industry merger.

Renault SA Chairman Jean-Dominique Senard promised to improve relations with partner Nissan Motor Co., telling shareholders that broken trust between the companies is reparable and leaving the door open to a future tie up with Fiat Chrysler Automobiles NV.

“The priority is to restore a strong alliance,” Senard said Wednesday at an annual meeting in Paris, noting that time, patience and effort from both Renault and Nissan will be needed. “Trust has to be earned,” he added.

Senard, 66, faced investors for the first time since taking the helm in January, two months after the arrest of his predecessor, Carlos Ghosn, on charges of financial crimes in Japan. Brought in by the French government -- Renault’s most-powerful shareholder -- to patch up relations with Nissan, Senard appears to have done the opposite. He further rocked the partnership by pushing and failing to get a merger with the Japanese automaker and then with Italian rival Fiat.

“I’m disappointed,” Senard said of the collapse of talks with Fiat, adding that the plan was for a non-binding agreement to have been signed last week.

‘Remarkable’ Deal

Senard blamed the French government, and not Nissan, for derailing a “remarkable and exceptional” project that he said would have generated positive synergies and value rarely seen in any other industry merger, and without human costs. Ironically, he noted, it was French Finance Minister Bruno Le Maire who “suggested” Renault approach Fiat “a few months ago.”

“We were captivated by this project,” he said. “I don’t know” whether it can be revived in the future, he added, without dismissing the possibility that talks could be rekindled.

In response to criticism from some shareholders and analysts that a combination with Fiat would have benefited Fiat more, Senard said the reasons to do a deal are compelling in the face of rapid advances by Chinese car manufacturers into the global market.

Ghosn’s downfall on charges he denies has had profound effects on both Renault and Nissan, serving to exacerbate a climate of mutual suspicion between the carmakers and creating internal turmoil as revelations unfolded about his alleged financial transgressions. As head of Renault, Nissan and the third partner, Mitsubishi Motors Corp., Ghosn had unusual powers that helped hold the alliance together.

The fallout from the Ghosn affair “left the alliance more damaged than what was initially apparent,” Senard said Wednesday. The partnership “is making a new beginning that needs to be confirmed.”

At the heart of the problem is a lopsided shareholding arrangement and a 2015 agreement on governance that is open to interpretation. Renault owns 43% of the Japanese carmaker with voting rights, while Nissan has a 15% stake in Renault, stripped of votes. The 2015 accord, known as RAMA, limits the French carmaker’s influence at Nissan.

Senard on Wednesday also sought to explain to shareholders why he has threatened to block critical governance changes at Nissan, a move that has further strained relations between the carmakers.

‘Start a War’

The modifications wouldn’t provide Renault Chief Executive Officer Thierry Bollore the same representation on Nissan’s board committees as Nissan-nominated directors have on committees of the French carmaker’s board.

“We’re not asking for more than this,” he said. “It’s not a reason to start a war.”

Nissan is “trying hard” to make progress in reaching a common understanding with Renault, CEO Hiroto Saikawa said in a late-night interview Monday.

In the aftermath of Ghosn’s departure, Renault shareholders on Wednesday approved boardroom changes including Senard’s appointment. Annette Winkler, the former head of Daimler AG’s Smart brand also won a seat, while directors Cherie Blair and Philippe Lagayette will leave. Investors also voted to deprive Ghosn of the variable portion of his compensation for 2018 and of his pay for the weeks he remained at the helm during 2019.

After Fiat pulled its offer, Senard considered resigning out of frustration with the state’s role in scuppering the deal, according to people familiar with the matter. Instead, President Emmanuel Macron called him to reiterate his support -- and make sure he would stay, said a person familiar with the matter, who has dismissed the possibility of a resignation.

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