Nissan, the Japanese leading automobile manufacturer, and Renault the French leading automobile manufacturer are now considering a merger. There are discussions going on between the two auto giants as they are looking to create a single biggest automobile company in the world through this merger. This merger will allow the companies to better compete or maybe overtake the giants in auto industry like Toyota and Volkswagen.
The merger will help the companies to manufacture electric, autonomous vehicles in the future. They can use each other’s resources and create self-driving, electric vehicles.
The merger means that Nissan will give shareholders stock to Renault in the new company and Nissan will then gain shares in the yet to be established newly merged company. The company will be led by the existing chairman of both companies Carlos Ghosn.
There will be issues in this merger. The one that seems quite apparent is that both companies belong to two different countries. The French government already had a 15% stake in Renault. Thus there might be reluctance and hesitations between French and Japanese government to leave their shares from their home-based companies. So what role the governments will play in this merger is yet to be seen.
Currently, Renault has 43% stake in Nissan. However, Nissan has ownership of 15% in Renault. Interestingly if this merger happens it will also be an end to the Renault, Nissan and Mitsubishi alliance that took place in 1999. Nissan paid a large amount, amounting to $2.3 billion to gain 34% ownership of Mitsubishi. This partnership between the three has led to an achievement of the fund which is worth $200 million. They invested in many startups and strengthened their position in the global auto sector through collective effort.
Now it seems that Renault and Nissan are closing towards a merger and will then jointly create a new company.