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France ready to cut Renault stake to shore up Nissan ties: minister

11 June 2019

Nissan received a letter from Renault saying it would abstain in voting on the governance measures at Nissan's June 25 shareholders' meeting, Saikawa said, apparently because its views weren't adequately reflected.

Strains within the alliance between Renault and Nissan increased today as the Japanese auto maker criticised its French partner for failing to back its governance reforms.

The power imbalance, coupled with issues related to the French government's role in Renault, as well as the fact that Nissan is the larger and more profitable of the two alliance partners, has created unease at Nissan's headquarters and significant friction between the automakers. "Such a stance runs counter to the company's efforts to improve its corporate governance".

Renault threatened to block Nissan's new business structure - which is being put before shareholders - unless it received representation on three new governance committees.

Three sources have told Reuters John Elkann, chairman of FCA, has had talks with Jean-Dominique Senard, Renault's chairman, and Thierry Bollore, the French automaker's CEO, about bringing the proposed merger between the two companies back to life.

Stung by the shock arrest of their leader, and now a failed deal to create one of the world's biggest automakers, decades-long partners Renault SA and Nissan Motors may have finally reached boiling point in their relationship.

In March a Nissan-appointed outside team recommended the formation of the three committees to improve its corporate governance.

The two companies have struggled to fix their relationship after Ghosn's arrest exposed simmering tensions, including Nissan's long-held concerns about the alliance's capital structure.

Le Maire said it was "legitimate" for France, as the "shareholder of reference" in Renault to have a say.

Le Maire's suggestion to reduce France's stake in Renault, if such a move would strengthen the alliance, was dismissed by Nissan, which has also sought a significant reduction in Renault's stake in itself.

Renault had yet to receive specific details on the proposed composition of each of the committees, another source with knowledge of the issue told Reuters. The corporate-governance reform "was discussed thoroughly by Nissan's board and approved by all board members, including Renault's own nominees", Saikawa said in a statement. The French government owns 15 percent in Renault.

Le Maire is set to meet Japan Finance Minister Taro Aso Monday, but hasn't planned any meeting with Nissan's management. "If there are differences of opinion (with Renault), then I'd like for those to be discussed". Under the proposal, Renault directors would be free to serve on the nominations committee, but would be barred from the compensation and audit committees.

Renault said an internal audit with Nissan found $12.5 million in questionable personal expenses allegedly linked to Ghosn at their Dutch-based holding company.

The latest crisis erupted a week ago, when Renault's merger talks with Fiat fell apart after Nissan abstained two of its board votes for further negotiation, prompting the French state to pause discussions.

France ready to cut Renault stake to shore up Nissan ties: minister