Renault Group has unveiled plans to offload a significant portion of its Nissan shares, amounting to approximately 5% of Nissan’s capital. This move is part of Renault’s broader strategy, with the shares set to be sold as part of Nissan’s share buyback program, slated for execution on December 13, 2023.
This decision follows the transfer of 28.4% of Nissan shares by Renault Group into a French trust on November 8, 2023. The upcoming sale, as per the New Alliance Agreement, will maintain cross-shareholdings of 15% between Renault Group and Nissan.
The anticipated sale of up to 211 million Nissan shares, assuming a share price of ¥568.5, could result in a disposal value of €765 million. While this would enhance the net financial position of Renault Group’s Automotive segment, there could be a capital loss on disposal of up to €1.5 billion, impacting Renault Group’s consolidated financial statements. However, it’s noteworthy that this capital loss, booked under “other operating income and expenses,” won’t affect the Group’s operating income. Additionally, a potential capital gain of up to €50 million is anticipated in the company statements of Renault S.A.
Importantly, this strategic move aligns with Renault Group’s capital allocation strategy, encompassing two distinct phases. The first phase involves advancing key strategic projects, including Ampere and Horse, while simultaneously enhancing operational performance, generating free cash flow, and reducing debt. The primary objective in this phase is to attain an investment-grade credit rating.
During this period, the Group will adhere to its dividend policy, progressively increasing its pay-out ratio to reach 35% of net income – Group share. Concurrently, employee shareholding plans will be implemented, aiming for 10% employee shareholders by 2030. As outlined in its Capital Market Day in November 2022, Renault Group intends to reinvest at least 50% of excess cash generated, dedicating 15 to 20% of free cash flow to financial investments, aligned with the Group’s ROCE targets.
In the second phase, Renault Group envisions further development around its value chains and returns to shareholders. The company’s strategic moves reflect its commitment to navigating a dynamic automotive landscape and maximising shareholder value.
