Yahoo Finance Nissan (NSANY) Likely Urges Renault to Bring Down Stake to 15%
Nissan Motor Co. NSANY and Renault RNLSY have recently announced that the two companies are in discussion about the future of their long-standing partnership. It has been reported that Nissan wants Renault to cut down its stake to 15% from 43%.
Renault acquired a majority stake in the Japan-based automaker over two decades ago, at a time when Nissan struggled with debts and losses during the Asian financial crisis and Renault, through its stance, had bailed out Nissan. Renault now holds 43% of the company, which in turn has a 15% stake in its French partner without voting rights. Per sources, Nissan is not satisfied with Renault’s huge stake and is likely aimed at drawing to a level with its share in the latter.
The French carmaker, in a bid to rev up its electrification progress, has laid out intensive revamp plans under which it aims to build up two EV units, code named Ampere and Horse. One entity will be dedicated to EVs and software. It would be based in the country and employ about 10,000 people by 2023. A second entity would focus on internal combustion and hybrid powertrains, and be based outside France, with around 10,000 staff.
Renault is not enthusiastic in bringing down its stake. However, it hopes to win Nissan as an investor in its new EV venture, especially to gain market share overseas. Per reports, Nissan’s decision to invest is conditioned on Renault’s reduction of its stake.
Talks are ongoing that Nissan may consider raising funds to buy back the shares that are held by Renault.
It is believed that a strategized sell down of the stakes will take place, likely not at one go but in tranches and eventually Nissan will get the upper hand in the sales.
Earlier this year, the two automakers along with Mitsubishi formed an alliance to co-develop EVs. The companies together planned to invest more than $23 billion in EV development over the next five years and expected to come up with more than 30 new EVs fortified by five common platforms by 2030. The partnership was a celebrated one as it had a shared vision of electrified mobility.
Sources have said that Mitsubishi was also considering taking a single-digit percent stake in Renault's new EV unit.
It seems that Nissan has set a firm foot over being an equal player in acquiring stakes and is determined to bring down Renault’s capital holding in what has been a contentious issue for quite some time.
Shares of NSANY have lost 37.7% over the past year compared with its industry’s 38.6% decline.
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Zacks Rank & Key Picks
NSANY currently has a Zacks Rank #5 (Strong Sell).
Some better-ranked players in the auto space are Cummins Inc. CMI and Dorman Products DORM, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.
Cummins has an expected earnings growth rate of 17.9% for the current year. The Zacks Consensus Estimate for CMI’s current-year earnings has been revised 0.23% in the past 30 days.
Cummins’ earnings beat the Zacks Consensus Estimate in two of the trailing four quarters and missed in the other two. CMI posted a trailing four-quarter earnings surprise of 1.49%, on average. The CMI stock has declined 5.3% in the past year.
Dorman has an expected earnings growth rate of 10.1% for the current year. The Zacks Consensus Estimate for current-year earnings has remained constant over the past 30 days.
Dorman’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and missed once. DORM reported a trailing four-quarter earnings surprise of 0.85%, on average. The DORM stock has declined 9.1% in the past year.
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