RENAULT CHAIRMAN Louis Schweitzer talked about cross-shareholding and the creation of Renault-Nissan BV in the Netherlands with Automotive News Europe's Sylviane de Saint-Seine.
When did you begin thinking about speeding up the timetable for a tighter relationship between Renault and Nissan?
About a year ago, when it appeared that Nissan was recovering faster than expected, and that we were working together well.
Can you explain how the new Renault-Nissan BV structure will help deter hostile takeovers?
Under Dutch law, a foundation can be set up that will be closely linked to RN BV. In case of an unsolicited takeover bid, this foundation can acquire the control of RN BV. The power of RN BV is then transferred to the foundation, whose board is constituted with independent personalities. Those independent board members will decide on the fate of the unsolicited takeover bid. If it's a very good deal for investors, obviously it will accept the bid. If it's a kind of creeping takeover bid, then the board will be able to turn it down.
Was this reorganization prompted by the French state's desire to sell part of its stake in Renault, leaving you vulnerable to a takeover?
Absolutely not. The project of creating that common structure for operational purposes came first.
Renault and Nissan are each increasing their capital to allow for a cross-shareholding. This means lower earnings per share for existing stockholders. Aren't you worried this move will upset your respective shareholders?
From the very start of the alliance, we said Renault's increased stake in Nissan would translate into a capital increase by Nissan. This was stated clearly in the initial 1999 accord, so Nissan shareholders can't say they are being taken by surprise.
As for the capital increase that Renault is doing to accommodate Nissan's 15 percent stake, it's true it was not planned as such. It is true that it will have a dilutive effect. But it will have a positive effect on Renault's balance sheet.
At present the consensus is that it's much better to have a strong balance sheet than to maximize earnings.