Renault is set to offload approximately 5% of its stake in Nissan Motor as part of a share buyback initiative by the Japanese automaker. The stake sale, valued at around 765 million euros (Rs 6,722 crore), is expected to incur a capital loss of Euro 1.5 billion (Rs 13,182 crore), Bloomberg reported on Tuesday.
This move follows the recent finalisation of Renault's plan to reduce its interest in Nissan. Bloomberg Intelligence analyst Tatsuo Yoshida highlighted that, given Nissan's shares trading below the Tokyo Stock Exchange's guideline of maintaining a price-to-book ratio above 1, the buyback will "help improve the situation."
CEO Luca de Meo's push to get Ampere, Renault's electric-vehicle and software arm, going is expected to benefit from the cash infusion resulting from this stake sale. De Meo aims to split off Ampere and list it as a separate public entity as early as April or May. As part of the deal, Nissan has also agreed to invest in Ampere, Bloomberg shared.
Renault had earlier transferred its 28.4% stake in Nissan into a trust in November to facilitate a reduction in its holding. Despite this, lock-up and standstill obligations persist. De Meo had previously announced plans to start offloading the stake "very soon" in early 2024. However, Tuesday's announcement came slightly earlier than anticipated.
Nissan, with cash and equivalents valued at Yen 1.6 trillion (US$ 11 billion) at the end of September, will pay Yen 568.5 for each share in the buyback. The Japanese automaker intends to cancel all acquired shares. Bloomberg analyst Tatsuo Yoshida expressed positivity 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 at roughly half its value from early 2017, reported Bloomberg.