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Renault-Nissan, France Reach Agreement on Voting Rights

Dec. 11, 2015
The French government has agreed to refrain from using its newly won voting rights power, except in "exceptional circumstances."

PARIS—Renault said on Friday that it had reached an agreement with its alliance partner Nissan and the French government to defuse tensions sparked by France raising its stake in the automaker.

The agreement, dubbed "alliance stability covenant," caps the government's ability to interfere in the affairs of the Renault-Nissan alliance in return for Nissan's stock in Renault remaining without voting rights.

The French state raised its stake in Renault to 19.7% this year, disturbing the fragile balance between the two companies and angering Renault-Nissan boss Carlos Ghosn.

That bolstered Paris' voting rights, effectively denying the Japanese company a say in how the business is operated.

"There is the strong will to put all this behind us," Ghosn said after a board meeting Friday that approved the deal.

Under the alliance agreement struck in 1999, Renault owns about 43% of Nissan. The latter in turn holds about 15% of the French automaker's shares, but without voting rights.

Nissan reportedly wanted the French government to cut France's Renault stake back to its previous level and had threatened to raise its own stake in Renault to reassert its influence if France did not budge.

But instead, the French government has now agreed to refrain from using its newly won voting rights power, except in "exceptional circumstances", Renault said, calling the debate leading up to the deal "fruitful".

Nissan's director for competitiveness, Hiroto Saikawa, said he felt his company and the French government "can trust each other" and had reached "a good resolution."

He did, however, threaten that Nissan would not accept any future unwanted interference from Paris.

"I am not saying that from tomorrow we are going to increase the share holdings in Renault, it is not our intent, but if there is an infringement or violation Nissan has the right to increase the share holdings," he told a video conference.

According to the deal, the French government will refrain from using its extra voting rights, except concerning dividends, government representatives on the board, any sale of more than half of Renault's assets and "interested party transactions not approved by French government representatives on the Renault board."

It would also exercise its voting rights in the event of any takeover bid on Renault or any investor trying to buy more than a 15% stake in the French car maker.

More specifically, any attempt by Nissan to exercise voting rights in Renault would also trigger the government's use of its extra voting powers, it said.

France's Economy Minister Emmanuel Macron and finance chief Michel Sapin said in a joint statement that they welcomed the consensus reached in the agreement on the government's voting rights, which still preserve its right to intervene on strategic issues for the company.

Renault shares fell sharply following the deal, trading 5.1% lower at 87.97 euros in Paris.

Nissan shares also dropped. On Wall Street, where they are listed as foreign shares (ADRs), they dropped 1.3% to $20.31. The Tokyo stock exchange, Nissan's main market, was closed at the time of the announcement.

Copyright Agence France-Presse, 2015

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