Renault Group Sells 5% Nissan Stake, Reflects 1.5 Billion Euro Loss

Dec 12, 2023 11:27 PM EST

Renault Group has unveiled its intention to divest a substantial portion of its Nissan holdings, amounting to about 5% of Nissan's capital. Renault is trying to realign its finances after a big 1.5 billion Euro loss, and this move is part of its capital allocation plan. As part of Nissan's plan to buy back its own shares, the sale will happen on December 13, 2023.

Process: Renault's and Nissan's Deal

Under the New Alliance Agreement, Renault Group and Nissan will continue to maintain cross-shareholdings, ensuring a 15% stake in each other. However, this transaction marks a shift in their shareholding structure, with Renault relinquishing a significant portion of its 28.4% Nissan shares held in a French trust since November 8, 2023.

If all 211,000,000 Nissan shares are sold at a share price of ¥568.5, it could yield a disposal value of up to €765 million, ultimately bolstering Renault Group's net financial position within its Automotive segment. Conversely, there may be a capital loss on disposal of up to €1.5 billion, which could impact Renault Group's consolidated financial statements.

Renault Group shared details through its website. Nevertheless, this capital loss would be categorized under "other operating income and expenses" and would not affect the Group's operating income. On a brighter note, Renault S.A. could potentially realize a capital gain of up to €50 million.

Importantly, this divestiture will not have any bearing on the remaining Nissan shares held in the balance sheets of Renault Group and Renault S.A.

Instead, it matches with Renault Group's overall capital allocation plan, which is split into two separate stages.

In the first phase, strategic projects like Ampere and Horse are put into action, along with improving business performance, making free cash flow, and lowering debt.

Renault wants to use tools like bonuses, employee shareholding plans, and putting extra cash back into the business in order to get an investment-grade credit rating.

In the second part, the Renault Group plans to keep growing in all of its value chains, with the goal of making owners more valuable. These moves that Renault Group is planning show that they want to do well even if the market changes.

About Renault Group

According to its website, Renault Group is leading the way in a rapidly evolving mobility landscape. With the support of its partnership with Nissan and Mitsubishi Motors, as well as its distinctive knowledge in electrification, Renault Group consists of four distinct brands - Renault, Dacia, Alpine, and Mobilize - all of which provide eco-friendly and inventive mobility options to their clientele.

They are a caring organization that believes in responsible progress, valuing the well-being of everyone. Since 1898, their history has been shaped by passionate individuals who have crafted innovative products that align with prevailing culture and are designed to enhance people's lives.

They are empowered by their Alliance and the positive partnerships they establish with their collaborators. Since their inception, their innovative mindset has propelled them forward, generating value, foreseeing the demands of mobility, and fostering greater connections among people.