PARIS/TOKYO - Renault and Nissan have entered discussions to reorganize their capital alliance structure in a bid to contain the growing influence of the French government, reports said.
An option is for Renault to lower its stake in Nissan below 40 percent from the current 43.4 percent - a move that would, under French law, allow the Japanese partner's stake in Renault to carry voting rights, the Nikkei business paper reported today. The paper did not say where it got its information.
Bloomberg also reported, citing people familiar with the matter, that Renault is considering cutting its stake in Nissan to trigger voting rights for its the Japanese partner.
Nissan holds 15 percent of Renault but has no voting rights because the French automaker is considered the controlling partner.
Carlos Ghosn, who is chairman and CEO of both automakers, is seeking to make the alliance more balanced. The 16-year-old partnership is secured by Ghosn's dual roles and cross-shareholdings that favor Renault.
"There is a logic for a re-balancing of the alliance," said Philippe Houchois, a London-based analyst at UBS Group. "There is too much capital that is being immobilized right now."
The situation highlights the conflict between Ghosn and the government that arose five months ago after the state increased its stake in Renault to 19.74 percent from 15.01 percent without informing the carmaker in advance.
The move was meant to boost France's power at one of the country's key manufacturers by pushing through a loyalty-shareholder program, which doubled the voting rights of investors who have held stock for more than two years.
Renault and Nissan objected, saying it could damage the alliance.
The 16-year-old French-Japanese alliance has been viewed as one of the few partnerships that worked in the auto industry.
The alliance's structure was created when Nissan was on the verge of bankruptcy. But the Japanese automaker has since become more profitable than Renault, contributing 1.56 billion euros ($1.75 billion) to its partner's bottom line last year. Nissan accounts for two-thirds of the alliance's combined 8 million vehicle sales.
Nissan is also worth twice as much as Renault, raising questions about the viability of the tie-up's structure even before France's move.
The French government still hasn't yet sold down its 19 percent stake to the original 15.01 percent as planned.
While French authorities support Ghosn's strategy, they favor the status quo as far as the alliance structure is concerned, a source told Bloomberg. France and Nissan each have two representatives on Renault's 19-member board of directors.
A resolution on restructuring the alliance by Renault's board, which met Tuesday, isn't expected soon as the government isn't in favor of the move, a source told Bloomberg.
Officials at Nissan and Renault were not immediately available for comment.
Reuters and Bloomberg contributed to this story