June 13, 2019 02:46 AM
Ania Nussbaum and Tara Patel, Bloomberg
Ania Nussbaum and Tara Patel, Bloomberg
Renault Chairman Jean-Dominique Senard kept the door open for a future tie up with Fiat Chrysler Automobiles, telling shareholders that work must first be done to repair a broken relationship with partner Nissan.
Senard, 66, used Renault’s annual meeting in Paris to give his own version of tumultuous events over the past weeks that have placed unprecedented strain on its two-decade alliance with Nissan. He also went on the offensive against the French state -- Renault’s most powerful shareholder -- over the collapse of talks with Fiat to create the world’s third-largest automaker.
“This project remains, in my head, absolutely remarkable and exceptional,” Senard said. “Frankly, I am saddened.”
Senard was brought in by the government in January to patch up relations with Nissan after the arrest of his predecessor, Carlos Ghosn, on charges of financial crimes in Japan. Nearly five months later, detente with the Japanese automaker appears further from his reach, making an eventual deal with Fiat even more elusive because of demands from France that Nissan be on board.
Speaking to shareholders on Wednesday, Senard described his deep disappointment at the failure of the FCA merger project, saying the combination would have generated positive synergies and value rarely seen in any other industry merger, and without human costs. The deal was made all the more compelling, he said, because of potential rapid inroads by Chinese car manufacturers into the global marketplace.
“It was the first time there was a chance to create a European champion at a time when people keep complaining that it doesn’t exist,” he said. “This was a perfect example for France, for Renault and Europe to prove that we can do something together.”
He placed the blame for the derailing squarely with the French government, and noted ironically that it was Finance Minister Bruno Le Maire who first “suggested” Renault approach FCA “a few months ago.”
“We were captivated by this project,” he said, adding that he didn’t know whether it can be revived in the future.
French Finance Minister Bruno Le Maire told franceinfo radio he was not responsible for derailing the merger deal's collapse. "It remains in interesting opportunity. But I have always been very clear: that it should be in the context of a strategy to reinforce the [Renault-Nissan] alliance," he said.
Le Maire said he would meet Senard but added he would tell him that strengthening the Renault-Nissan alliance was the priority. "As long as the French state is the main shareholder, its responsibility to the company, its employees, its factories and research centers is to fulfil its role with other shareholders in defining a strategy."
The deal collapsed after Nissan said it would abstain at a Renault board meeting to vote on the merger proposal, prompting Le Maire to request the Renault board to postpone the vote for five days. "We simply asked for five extra days. Five additional days seems entirely reasonable to me," Le Maire said. "Fiat withdrew its offer, as it was entitled to do. But believe me, the state will never react under pressure."
Ghosn downfall damage
The downfall of Ghosn on charges he denies has had profound effects on both Renault and Nissan, serving to exacerbate a climate of mutual suspicion between the carmakers. As head of Renault, Nissan and the third partner, Mitsubishi Motors, Ghosn held unusual powers that helped hold the alliance together.
Fallout from the Ghosn affair “left the alliance more damaged than what was initially apparent,” Senard said Wednesday. The partnership “is making a new beginning that needs to be confirmed.”
At the heart of the problem is a lopsided shareholding arrangement and a 2015 agreement on governance that is open to interpretation. Renault owns 43% of the Japanese carmaker with voting rights, while Nissan has a 15 percent stake in Renault, stripped of votes. A 2015 accord, known as RAMA, limits the French carmaker’s influence at Nissan.
Senard on Wednesday also sought to explain why he has threatened to block critical governance changes at Nissan, a move that has the potential to tear apart the partnership, saying the curbs on Renault’s power isn’t normal.
The modifications wouldn’t provide Renault Chief Executive Officer Thierry Bollore the same representation on Nissan’s board committees as Nissan-nominated directors have on committees of the French carmaker’s board.
“We’re not asking for more than this. It’s not a reason to start a war,” Senard said.
Nissan is “trying hard” to make progress in reaching a common understanding with Renault, CEO Hiroto Saikawa said in an interview Monday.