Renault is preparing to divest about 5% of its stake in Nissan Motor as part of a share buyback program initiated by the Japanese automaker. The estimated value of the stake sale is around 765 mln euros (Rs 6,722 crore), and it is anticipated to result in a capital loss of Euro 1.5 bln (Rs 13,182 crore), as reported by Bloomberg on Tuesday.
This decision follows Renault’s recent confirmation of its plan to decrease its ownership stake in Nissan. Tatsuo Yoshida, an analyst at Bloomberg Intelligence, emphasized that the buyback by Nissan, especially with Nissan’s shares trading below the Tokyo Stock Exchange’s guideline of maintaining a price-to-book ratio above 1, will “help improve the situation.”
CEO Luca de Meo’s efforts to revitalize Ampere, Renault’s electric-vehicle and software division, are expected to receive a boost from the proceeds of the stake sale. De Meo is planning to separate Ampere from Renault and list it as an independent public entity, potentially as early as April or May. As part of the arrangement, Nissan has also committed to investing in Ampere, according to Bloomberg.
In November, Renault transferred its 28.4% stake in Nissan to a trust to facilitate a reduction in its holding. Despite this move, certain lock-up and standstill obligations remain in place. De Meo had previously indicated plans to start divesting the stake “very soon” in early 2024, but the announcement on Tuesday came slightly ahead of schedule.
Nissan, with cash and equivalents amounting to Yen 1.6 trillion (US$ 11 bln) at the end of September, will pay Yen 568.5 for each share in the buyback. The Japanese automaker intends to retire all acquired shares. Bloomberg analyst Tatsuo Yoshida expressed optimism about the development, stating, “It’s good news for the stock that Nissan will retire the equivalent of 5% of its outstanding shares.” Despite a 36% increase in Nissan’s stock this year, it remains approximately half its value from early 2017, as reported by Bloomberg.