Renault Needs Cash and Sells 5% of Nissan

For the third time in a year, Renault will sell nearly 200 million shares, representing about 5% of the capital of the Japanese manufacturer, to Nissan.

After two share sales to Nissan on December 13, 2023, and March 28, 2024, the Renault Group announces a third operation to sell up to 195,473,600 shares to Nissan.

This sale is part of the share buyback program that Nissan unveiled on September 26, 2024, which will be executed on September 27, 2024. Nissan has also confirmed its intention to cancel all acquired shares, an operation that will directly benefit Nissan’s shareholders.

The shares for sale are part of the 22.73% of Nissan capital currently held by a French trust. For reference, 28.4% was initially transferred to this trust by the Renault Group on November 8, 2023, in accordance with the terms of the New Alliance Agreement between Renault and Nissan.

Assuming the sale of 195,473,600 Nissan shares at a unit price of 408.5 ¥ (2.53 euros, the closing price of Nissan shares on September 26, 2024), this transaction would allow the Renault Group to generate a cash inflow of up to 494 million euros, helping it to reduce its debt.

The accounting consequences of this sale of 195,473,600 Nissan shares would be as follows:

In the consolidated financial statements of the Renault Group: a maximum capital loss of 1.1 billion euros, which would impact net income (this loss, recorded under “other operating income and expenses,” would have no impact on operating income). This loss will not affect the dividend to be paid in 2025 based on 2024 results, as it will be excluded from the distribution ratio calculation.
In the statutory financial statements of Renault S.A.: a capital loss estimated at a maximum of 120 million euros would be recorded.
The tax impact of this operation would be negligible.

This sale will accelerate the reduction of debt and contribute to the Group’s goal of regaining an investment grade rating. What to take away from this breakup is the independence sought by Nissan, which no longer believes in Europe for its development. And Renault no longer believes in Asia and the United States. There is a refocusing on effective Euro-African competencies at a time when electric power no longer imposes strong industrial synergies.