PARIS: Renault shares surged 6% on Wednesday as analysts highlighted financial and strategic benefits for the automaker from a potential Honda and Nissan merger.
Japan’s number two and three carmakers are in talks to deepen ties, including a possible merger, two people said, as they come under growing pressure from Tesla and Chinese rivals.
France’s Renault owns 17% of Nissan and 18.7% via a French trust, making it Nissan’s top shareholder, even after the two firms began scaling back their longstanding alliance last year.
Renault shares were the second biggest gainer on the pan-European STOXX 600 index on Wednesday after the report.
Renault has declined to say so far whether it would sell its shares, but two people familiar with the matter told Reuters on Wednesday that Renault is open in principle to it pursuing merger talks with Honda.
Nissan seeks investor to replace some of Renault’s equity holding, FT reports
Analysts said such a tie-up has positive implications for Renault. In the short term talks support Nissan’s stock, generating more liquidity as Renault continues its strategy begun late 2023 of selling its shares in its Japanese partner, said Jefferies.
It also gives Renault a potential buyer for a significant portion of its remaining stake in Nissan, worth almost 3 billion euros ($3.15 billion) currently, said analysts at Oddo.
Based on current market values, Honda shareholders would obtain around 85% of the new company and Nissan shareholders would get the rest, with slightly more than 5% for Renault based on its current stake in Nissan, they added.
Honda could also become a new client for Renault’s electric vehicle unit, Ampere, in Europe, said Oddo.
Nissan is already a key client, relying on Renault to make its Micra for the European markets and will also use the platform of the Renault Twingo electric for a future model.
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