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Exclusive: French compromise snubbed as Renault-Nissan pursues shake-up - sources

By Laurence Frost and Gilles Guillaume
The logo of French car manufacturer Renault is seen in front of an advertisement at a dealership in Paris, November 13, 2015. REUTERS/Christian Hartmann

By Laurence Frost and Gilles Guillaume

PARIS (Reuters) - France has offered to limit its voting rights at Renault <RENA.PA> in a bid to end its power struggle with the carmaker and partner Nissan, but their combined CEO Carlos Ghosn remains determined to push through changes that would give the Japanese company more say over the alliance, sources said.

The government overture, and its chilly reception, suggest the standoff with Ghosn may have slipped beyond the control of Economy Minister Emmanuel Macron.

The row became public in April when Macron increased France's stake in Renault to secure double voting rights. That raised hackles in Tokyo and prompted preparatory work by the alliance to alter its balance of power in Nissan's favor.

Sources with knowledge of the matter say the government has now softened its stance, offering to limit its voting rights just hours before an emergency Renault board meeting on Nov. 6. They gave no details of the proposed cap.

However Hiroto Saikawa, Ghosn's second-in-command at Nissan <7201.T>, expressed deep dissatisfaction with the French position during the meeting, one of the sources said.

"Just going back to the situation of seven months ago is not enough," said a Renault-Nissan insider familiar with alliance thinking. "It's clear there has to be a better balance between the two companies."

Spokespersons for Renault, Nissan and the French government declined to comment.

Renault currently owns a 43.4 percent controlling stake in Nissan, which nonetheless accounts for two-thirds of combined vehicle sales and a bigger share of profit. Nissan in turn holds a non-voting 15 percent of its French parent, with Ghosn, 61, heading both carmakers.

Macron, a former investment banker, has led the push for increased state influence at Renault to safeguard domestic jobs, engineering skills and other strategic French interests.

France temporarily raised its Renault stake from 15 to 19.7 percent to block Ghosn's proposed opt-out from the Florange law, which will give double votes to long-term investors from the end of March. Under the new law, the state will wield a blocking minority at shareholder meetings even after its holding is cut back to 15 percent.

In response, Nissan drew up proposals to end Renault's control by replacing the current alliance structure with "better balanced" 25-35 percent crossed shareholdings, sources told Reuters last month.

The Renault board has formally backed action to restore Nissan's voting rights in the French carmaker, the sources said - a move that would require Renault to cut its Nissan stake.


The latest olive branch from Paris resembles an earlier compromise offer. Weeks before Renault's April 30 shareholder meeting, Macron volunteered to limit the increase in government voting rights if Ghosn dropped his proposed opt-out from the Florange law.

But the Renault board pressed ahead with the resolution, and France deployed 1.2 billion euros ($1.3 billion) of public funds to raise its stake and successfully block it.

In recent days, however, Macron has also backed away from an earlier push for a Renault-Nissan merger on French terms.

A full tie-up "is not on the agenda", the minister said on Tuesday, a week after sources told Reuters he had urged Ghosn for months to set up a merger working group.

Last week's Renault board meeting created an ad-hoc subcommittee to oversee continuing negotiations between the French government and Nissan, but the Japanese carmaker publicly voiced impatience with the process.

In a sign of Nissan's determination to make changes regardless of any French retreat, Chief Competitive Officer Saikawa said the voting rights showdown had "highlighted", rather than created, an imbalance in the partnership.

"Nissan would like to put this matter behind us as soon as possible so that we can reestablish the foundations of a successful alliance and focus on our real business," he said.

Saikawa is to brief the Nissan board within weeks, sources said, before Renault directors reconvene on Dec. 11.

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(Additional reporting by Norihiko Shirouzu in Beijing; Editing by David Clarke and Mark Potter)