French carmaker Renault will sell 5% of its stake in the Japanese auto company, Nissan, back to the company, as part of its first tranche of total planned reduction, both companies said on Tuesday.
This move is part of a plan both companies had reached earlier this year. In accordance with the plan, 28.4% of Nissan shares were transferred by the Renault Group into a French trust on November 8, 2023. Both companies aim to have cross-shareholdings of 15% as part of the alliance agreement, down from the current approximately 43%.
The companies also said that the sale of shares will have a disposal value of up to €765 million. It would reflect as a capital loss of up to €1.5 billion for the Renault group but will not affect its operating income.
“This amount is a maximum that could be adjusted at year-end to reflect Nissan’s capital allocation strategy; a capital gain on disposal of up to €50 million in the company statements of Renault S.A,” the carmaker said in the statement.
Renault, in November, had also explained its plans. “The priority is to return to an investment-grade credit rating. Until this investment-grade rating objective is reached, the Group will apply its dividend policy, with a gradual increase of its payout ratio up to 35% of net income - Group share. It will also continue to implement employee shareholding plans, with the aim to reach 10% of employee shareholders by 2030,” it reiterated on Tuesday.
The French carmaker also plans to reinvest at least 50% of the excess cash generated and will dedicate a maximum of 15 to 20% of its free cash flow to financial investments.
Meanwhile, for their India plans, both companies had announced to invest $600 million in their Indian Technology & Business Centre in Chennai to support new projects which include Research and Development (R&D) and creating up to 2,000 additional new jobs, in February this year. The companies, together, aim to introduce electric vehicles in the Indian market soon to transition to carbon-neutral manufacturing in the country.
