RNO Renault SA

By Sean McLain and Nick Kostov 

Top executives at Nissan Motor Co. and Renault SA are trying to hash out a deal to reshape their global alliance, a step top executives at the French car company hope will pave the way for merger talks with Fiat Chrysler Automobiles NV to resume, according to emails reviewed by The Wall Street Journal and people briefed on the discussions.

Nissan wants Renault to reduce its 43.4% stake in the Japanese auto company, the emails show, a move one of the people said is aimed at resolving longstanding tensions between the two car companies over the structure of their globe-spanning alliance.

Nissan is the larger company of the two, but only owns a 15% nonvoting stake in Renault. The uneven shareholding agreement that binds the alliance partners has long been a point of contention. Concerns within Nissan that Renault's merger with Fiat Chrysler could weaken the Japanese car maker's influence in the alliance led it to withhold support for the deal, ultimately leading to the deal's collapse.

Top executives at Renault are hoping changes to the shareholding structure will allay Nissan's concerns and clear the way to restart merger talks with Fiat Chrysler, according to the emails. The merger proposal fell apart in June after Nissan said it wouldn't back a tie-up and the French government asked to delay a board vote on the matter. Fiat Chrysler Chairman John Elkann got frustrated and walked away, ending discussions.

Renault and Nissan declined to comment for this article.

Talks to change the alliance's structure began soon after the possible Renault-Fiat Chrysler deal collapsed and have been limited to a small circle of top executives, board members and lawyers for the companies, in part to prevent leaks, according to the emails and one of the people involved.

The people briefed on the discussions cautioned the negotiations are at an early stage, including talks on the potential reduction in Renault's stake in Nissan. The talks could result in an initial memorandum of understanding on the restructuring as early as September, according to one of the emails, which is dated July 12. Another person briefed on the discussions warned that talks could stretch until the end of the year.

Even if the companies agree that Renault should sell shares in Nissan, they will need the blessing of the French state, which has expressed resistance to changing the structure without also strengthening the alliance between the two car companies.

Renault and Fiat Chrysler have said that they continue to see the merits of the merger, but no talks are currently happening.

Fiat Chrysler has said previously it can thrive as a stand-alone company but still believes the merger proposal with Renault could add value. On Wednesday, its CEO Mike Manley echoed that sentiment in an earnings call with analysts, calling it "a great opportunity for us. And we believe it's a very good opportunity for Renault."

A Fiat Chrysler spokesman declined to comment.

Write to Sean McLain at sean.mclain@wsj.com and Nick Kostov at Nick.Kostov@wsj.com

(END) Dow Jones Newswires

August 02, 2019 18:59 ET (22:59 GMT)

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