STM News: Renault to Sell 5% of Nissan Stake, Expects 1.5 Billion Euro Loss
2 min read
French carmaker Renault is set to sell a 5% stake in Nissan as part of its strategy to reduce its holding in the Japanese automaker. The sale is expected to reflect a loss on Renault’s initial investment of up to 1.5 billion euros. The aim is to reduce Renault’s stake in Nissan from its current 43% to 15%.
To achieve this, Renault has placed a 28.4% stake in a trust and plans to gradually sell it down. As part of the restructuring of the Renault-Nissan alliance, the sale is seen as a step towards a downsized and more agile partnership between the two companies.
Under the terms of the agreement, Nissan has the right of first offer on the shares and will buy back the 5% stake. This move is expected to help Renault regain an investment grade rating and improve its cash balance by up to 4.2 billion euros.
Renault values its 43.4% Nissan stake at 17.5 billion euros, while Nissan’s market value is just over 15 billion euros. The sale of shares worth an estimated 765 million euros is scheduled to take place on Wednesday.
Following the announcement, Renault’s shares were down 2% in Paris. However, the company remains optimistic about the future. In addition to the sale of the Nissan stake, Renault is undergoing a broader overhaul, including the planned market listing of its electric vehicle unit Ampere next year.
As part of the deal, Nissan will cancel the shares it is buying back from Renault. The acquisition cost for Nissan is estimated at 119.95 billion yen, which will be funded by its net cash position.
Overall, the sale of the 5% stake in Nissan marks a significant step for Renault in its strategic plan to reduce its holding and improve its financial position. With the aim of a downsized and more agile partnership, both companies are confident that this move will lead to a stronger alliance in the future.
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