Nissan to Acquire and Cancel Shares from Renault in Strategic Move

Nissan Motor Co., Ltd. has announced that it will acquire and subsequently cancel a portion of its own shares currently held by Renault. The decision, approved by Nissan’s Board of Directors last week is part of Nissan’s strategy to enhance shareholder returns and improve capital efficiency while maintaining strong financial resources to meet its business objectives. This development follows Nissan’s right of first offer as outlined in the New Alliance Agreement between Nissan and Renault. The move marks another significant step in restructuring the Nissan-Renault alliance.

Nissan has received an offer from Renault to sell a portion of its Nissan shares, which are currently held in a French trust. Nissan has opted to purchase 195,473,600 common shares, representing 5.03 per cent of its total issued shares (excluding treasury shares). The acquisition will be executed through the ToSTNeT-3 off-auction share repurchase trading system on the Tokyo Stock Exchange. The transaction is valued at approximately ¥79.85 billion (about USD 536 million).

The acquisition will be completed using Nissan’s net cash position, which reflects the company's financial strength. Nissan’s decision to repurchase and cancel these shares aligns with its commitment to increasing shareholder value while ensuring it retains the financial flexibility to continue implementing its long-term business strategies.

It is important to note that the number of shares and cost associated with the acquisition will not change, but part or all of the acquisition may not be carried out depending on market conditions or other factors, according to Nissan.

Following the completion of the acquisition, Nissan will cancel all the repurchased shares. The cancellation is scheduled to occur on October 3, 2024. This action is consistent with Nissan’s objective of reducing the overall number of shares in circulation, thus boosting the value of the remaining shares and enhancing capital efficiency. By cancelling the shares, Nissan intends to reduce potential dilution and focus on improving the return on equity (ROE) for its shareholders.

The acquisition and cancellation of shares come at a time when Nissan is looking to strengthen its independence and improve its corporate governance. The repurchase of shares from Renault signals a shift in the Nissan-Renault alliance, one of the world’s largest automotive partnerships. Under the New Alliance Agreement, both companies had previously renegotiated terms to rebalance their shareholdings, marking a new phase in their long-term relationship.

Renault’s decision to reduce its stake in Nissan could allow both companies to pursue more autonomous strategies while maintaining the benefits of their partnership. Nissan's repurchase will lead to a reduction in Renault's influence, although the companies will likely continue to collaborate in areas such as electric vehicles and technology sharing.