Renault to sell 5% stake in Nissan at €1.5bn loss
Renault, the French carmaker, has revealed its plan to sell a 5% stake in Nissan. This is the first step in disposing of its holdings in the Japanese automaker as part of a broader rebalancing of their long-standing alliance. This move will result in a loss of up to €1.5 billion ($1.62 billion) on Renault's initial investment. The sale is the first of several share sales by Renault, aiming to lower its Nissan stake from around 43% to 15%.
Share buyback and impact on Renault's financials
According to Renault, the sale of stocks worth an estimated €765 million will be executed via a share buyback tomorrow (December 13). While the €1.5 billion capital loss will affect the company's net result for the year, it won't impact operating income. After the announcement, Renault shares experienced a 0.2% drop in early Paris trading, following a brief rise at the market open.
Nissan's acquisition and funding details
In a separate statement, Nissan has informed that it will acquire the stocks that Renault is selling via a right of first offer. The firm will also cancel those acquired stocks. The Japanese carmaker stated that the acquisition cost would be around ¥119.95 billion ($824.85 million) and that it would fund the payment through its net cash position. Nissan added that this move is in line with its "commitment to enhancing shareholder returns and capital efficiency."
Reason behind deal restructuring
Back in July this year, after months of negotiations, Renault and Nissan finalized the terms of their partnership restructuring. The aim was to create a "downsized but more pragmatic and agile" alliance.
