PRESS RELEASE October 30, 2001
For immediate publication
With cross-shareholding and creation of Renault-Nissan BV
Renault and Nissan plan to step up development of the Alliance
In a natural step in the development of their Alliance, Renault and Nissan announced today a plan to accelerate development of the Renault-Nissan bi-national group, in keeping with the principles of the Renault-Nissan Alliance and Equity Participation agreement signed in March 1999 and the Alliance Charter. The timing of this next step has been brought forward as a result of the fast and strong success of the Nissan Revival Plan and the successful implementation of numerous common programs within the Alliance. The plan provides for cross-shareholdings, with Renault exercising its existing warrants and increasing its stake in Nissan up to 44.4% and Nissan investing a stake of 15% in Renault. It also calls for the creation of a joint management structure with a goal to reinforce the Alliance’s common mid- and long-term strategy in order to move the Alliance forward in a balanced way while reaching for higher performance. Considering the strengths of the Renault-Nissan Alliance strategy, the French State has decided to support this move and will further reduce its stake in Renault to 25%. The timetable of this public offering will depend on market conditions.
Under the memorandum of understanding, which would be signed by Louis Schweitzer for Renault, and Yoshikazu Hanawa and Carlos Ghosn for Nissan, Renault would now be allowed to exercise the warrants it has held since signing the March 1999 agreement and raise its equity participation in Nissan from 36.8% up to 44.4% at the previously agreed price of JPY400 per share, for a total of EUR 2 billion. Nissan will issue the corresponding 540 million shares.
Additionally, Nissan would acquire an equity stake of 15% in Renault, through a reserved capital increase. This transaction will have no impact on Nissan’s performance to reach the commitment made to reduce net automotive indebtedness in the framework of the Nissan Revival Plan.
The shares will be ordinary shares. However, under French law dealing with self-control, the voting rights associated with these shares would not be executable while they’re held by Nissan.
Renault would submit a proposal to its Board of Directors and shareholders for an additional Nissan representative to join the Renault Board as a non-executive member. Nissan will make a similar proposal for a Renault representative to join the Nissan Board from Renault as a non-executive member. Nissan will propose Carlos Ghosn as its representative and Renault will propose Shemaya Levy as its representative.
The intended new cross-shareholding illustrates the global balance of the Alliance and ensures that each company will have an interest in the enhanced performance of the other.
Under the memorandum of understanding, Renault and Nissan would create Renault-Nissan BV, a joint and equally owned management company operating under Dutch law, with headquarters in Paris and Tokyo. Renault-Nissan BV will steer Alliance strategy and supervise common activities on a global level, while respecting the identity and culture of each company and not interfering in operations.
Renault-Nissan BV would have sole responsibility for decisions on mid- and long-term planning (three, five and ten year plans), on commonalities in products and powertrains, and on principles of financial policy. It will validate Renault’s and Nissan’s product and powertrain plans. It will wholly own and manage existing (Renault-Nissan Purchasing Organization) and future joint companies, which will establish exclusive contractual relationships with Renault and Nissan.
Renault-Nissan BV would also make proposals to Renault and Nissan on issues such as the creation of joint companies, significant changes in market or product coverage, major investments and third-party strategic cooperation. Existing Cross Company Teams, which have been building the Alliance over the past two and a half years, would report to Renault-Nissan BV, which will replace the Global Alliance Committee (G.A.C.), the current governing body of the Alliance.
The position of President of Renault-Nissan BV would be held by the Chairman and Chief Executive Officer of Renault and that of Vice President by the President and Chief Executive Officer of Nissan. Six top executives from both companies will complete the eight members of Renault-Nissan BV’s management team. The initial officers of Renault-Nissan BV would be:
President, Louis Schweitzer (Renault)
Vice President, Carlos Ghosn (Nissan)
Members (alphabetically):
Pierre-Alain de Smedt
Georges Douin
François Hinfray
Hisayoshi Kojima
Norio Matsumura
Nobuo Okubo
A Foundation linked to Renault-Nissan BV and holding an option for preference and priority shares in Renault-Nissan BV would be established to protect the interest of the Alliance and its shareholders, as it is customary under Dutch law. The purpose of the Foundation will be to ensure that, should a third party intend to take over bid of shares either in Renault or Nissan, it should offer an appropriate price.
Renault and Nissan would continue to run their operations under their respective management teams, accountable to their Boards of Directors. Renault and Nissan will continue to operate as two separate companies, with their own head offices, management, employee-representative bodies and equity listings.
For legal reasons, Renault intends to create a new subsidiary, 100% held by Renault, which would become the operating subsidiary for the Renault business and group all its automotive operations. It would hold Renault’s assets with the exception of Renault’s stake in Nissan. The reorganization will have no impact on the status of Renault employees.
The French State currently has a 44.2% shareholding in Renault that would be reduced to 37.6% subsequent to the capital increase reserved for Nissan subject to approval by the French CPT. Considering the global merits of the intended agreement and convinced that Renault's future development now lies firmly within the Renault-Nissan bi-national group, the French State has decided to accompany the evolution of the group's structure by reducing its stake in Renault according to a time-table to be defined taking into account market conditions. Further to the public offering, which would be proposed to the market and company employees, the State's shareholding in Renault would stand at 25%.
In March 1999, Louis Schweitzer and Yoshikazu Hanawa signed the Renault-Nissan agreement which established the Alliance, with Renault taking a 36.8% stake in Nissan’s share capital through a reserved capital increase of JPY 590 billion (FRF 30 billion / EUR 4.6 billion). In addition, Renault obtained warrants to purchase 540 million shares to be newly issued by Nissan at JPY 400 per share, granting Renault the right to increase its stake up to 39.9% of Nissan at any time, and up to 44.4% from May 29, 2003 through May 28, 2004. Nissan was given the right to purchase Renault shares under terms to be settled. The two companies created the Global Alliance Committee (GAC) as the governing body of their Alliance.
The memorandum of understanding between Renault and Nissan is subject to the different information, consultation and approval procedures of several authorities such as Renault social bodies, Renault and Nissan corporate bodies, and the French and Japanese market authorities.
Yoshikazu Hanawa, Chairman of Nissan, stated: «This move is the next natural step in the evolution of the Alliance. It demonstrates that a Japanese and a French company, deeply rooted in their own culture and identity, have been able to cooperate successfully, without losing their uniqueness »
Carlos Ghosn, President and Chief Executive Officer of Nissan, stated: «The timing of this next step of the Alliance has been moved forward as a result of the fast and strong success of the Nissan Revival Plan. Nissan is now in a position to fully play its role in the Alliance with the goal of improved mutual performance ».
Mr Schweitzer, Chairman and Chief Executive Officer of Renault, stated: «This project provides for stronger strategic management to move the Alliance forward in a balanced way, reaching for higher performance. Renault and Nissan are successfully building a strong bi-national group, which is unique in the automotive industry»
Contacts :
Renault Press: Marie de Saint-Cheron, +33 1 41 04 64 69
Web site: www.renault.com
Nissan Communication: Claire Martin, +33 1 30 13 67 58
Web site: www.nissan-global.com