Forget all the talk about a more balanced relationship between Renault and Nissan. The recent equity reshuffle between the two carmakers and their new joint management structure will leave Renault's commanding position within the alliance undiluted.
The two companies presented the changes to their initial March 1999 accord as a reward to Nissan employees for their contribution to the Japanese carmaker's recovery, and as a step toward more efficient cooperation.
From the beginning, when Renault came to the rescue of financially troubled Nissan, Nissan Chairman Yoshikazu Hanawa said the alliance would develop into a 'balanced partnership.'
Renault Chairman Louis Schweitzer and Nissan CEO Carlos Ghosn concurred.
Indeed, Ghosn insisted the motivation of Nissan employees was a key reason behind the changes - notably the 15 percent stake Nissan is taking in Renault.
But a closer look at the new structure leaves many observers puzzled.
'The combination between the two companies makes a lot of sense, but it's not particularly clear how the latest changes mark an improvement,' said Jim Collins, an analyst with UBS Warburg in London.
Take Renault Nissan BV, or RN BV, the new equally owned management entity set up in the Netherlands. The French company's chairman has, by right, the deciding vote within the eight-member structure. Schweitzer also ruled out any prospect of rotating the RN BV presidency between Renault and Nissan. Finally, he reaffirmed his opposition to any thought of merger between the two companies saying it would be artificial and would cut them off from their national roots.
Analysts say it is not clear how RN BV will be more efficient than the alliance's current governing body, known as the Global Alliance Committee.
RN BV has 'sole responsibility for mid- and long-term planning, commonality in products and powertrains, and on principles of financial policy,' Renault and Nissan said.
But analysts wondered why the development of engines and gearboxes required the creation of an entirely new legal structure based in the Netherlands. The country is more known for a tax regime that is friendly to large foreign companies.
Another case in point is the 15 percent stake Nissan is taking in Renault, presented as a milestone in their relationship. The stake will be devoid of voting rights, making it a purely symbolic move. Besides, Schweitzer said an increase in Nissan's equity in Renault was not on the agenda.
Trap for predators
Moreover, Nissan's stake in Renault will be offset by the increase of Renault's shareholding in Nissan, from 36.8 percent to 44.4 percent. This will be done through the exercise of warrants Renault took when rescuing Nissan back in 1999. Some of those warrants were not supposed to be exercised before June 2003 and June 2004.
'It is very hard to understand why Renault has chosen to exercise its warrants now,' said Gianluca Pediconi at CSFB in London.
Because Renault's additional stake in Nissan - at today's share price and exchange rates -costs more than Nissan's 15 percent stake in Renault, the French carmaker will have to make up the difference by raising money on Tokyo's capital markets.
Even though Japanese interest rates are low, news of Renault adding E500 million to its debt is hardly pleasing for investors.
One of the most novel features in the new arrangement is a trap for potential corporate predators. Under Dutch law, RN BV can be linked with a special foundation that will have the power to thwart an unsolicited takeover bid.
This 'poison pill' will be useful since the French government is using the Renault-Nissan share reshuffle to slash its 44.2 percent shareholding to 25 percent when market conditions are right.
At today's share price, the French government would receive about E1.2 billion for its Renault stake.
Louis Schweitzer had already mapped out the French state's future role within Renault. He said: 'I see it as a stable shareholder, a bit like the state of Lower Saxony with Volkswagen.'