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 A pair of agreements, yet to be approved, would offer Nissan
<7201.T> guarantees against future interference by parent Renault <RENA.PA>
and its biggest shareholder, the French state, the sources said.
Renault's board was meeting on Friday to discuss the draft accords.
Renault-Nissan declined to comment.
Tension has been building since April, when Economy Minister
Emmanuel Macron temporarily raised France's Renault stake to secure
a permanent increase in its voting rights - and enough clout to veto
strategic decisions or tie-ups that might one day endanger domestic
interests including jobs.
The move raised hackles at Nissan, 43.4 percent-owned by Renault,
pitting Macron against alliance Chief Executive Carlos Ghosn, who
has headed both carmakers for the last decade.
Since its 1999 rescue by Renault, Nissan has outgrown its French
parent and now leads the way in engineering and other key areas,
within an alliance now ranked as the world's fourth-largest carmaker
by combined sales.
In what may prove to be an important turning point, the draft deals
would grant Nissan the right to lift its Renault stake to 25 percent
in case of interference by Paris or its alliance partner in breach
of the new undertakings.
Nissan had threatened to exit the carmakers' 2002 alliance agreement
unless a deal was reached by Friday, freeing it immediately to raise
its Renault stake. An increase to 25 percent would cancel Renault's
voting rights in Nissan under Japanese law, effectively ending
French control.
"It's a serious threat," a source with knowledge of the government's
position told Reuters before the board meeting. "This is a risk the
finance ministry does not want to take, so Ghosn's in a position of
strength."
The conflict burst into public view after Macron deployed 1.2
billion euros ($1.3 billion) of public money to raise France's stake
in Renault to 19.7 percent and block Ghosn's proposal to opt-out of
a new law giving long-term shareholders double voting rights.
Even after the holding is pared back to 15 percent, France will
command 28 percent of votes when the Florange law takes effect at
the end of March, enough to veto strategic decisions.
In a compromise offer last month, Macron agreed to forego some of
the government's extra voting rights on non-strategic shareholder
resolutions. The level of the cap is still under discussion, one of
the sources said.
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Guarantees against future interference include an undertaking that
Renault would never control a majority of Nissan's nine-member
board, one of the sources said. The French carmaker currently has
two Nissan board representatives.
Nissan, which had proposed bigger changes to the alliance's crossed
shareholdings in a confidential September proposal revealed by
Reuters, gave up some of those demands in the draft compromise.
For one thing, Renault would retain its right to name Nissan's top
three executives, one source said.
Some investors had hoped that Ghosn, 61, would use the crisis to
carry out deeper alliance reforms or even a full merger. That could
unlock some of the value of Renault's large stake in Nissan, worth
around $20 billion at the Japanese company's current market
capitalization.
Renault shares sagged after the initial Reuters report and were down
4.5 percent at 7.35 a.m. ET.
"There has arguably never been a better time for Renault-Nissan to
push through material changes to its structure," Exane BNP Paribas
analyst Dominic O'Brien said in a note this week.
"It would be a very disappointing outcome if Ghosn is unable to use
the current state of affairs to deliver this change."
(Reporting by Laurence Frost; Editing by Mark Potter)
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