July 25, 2019 / 10:23 AM / 4 months ago

Breakingviews - Renault’s de-Ghosnification helps up to a point

Former Nissan Motor Chariman Carlos Ghosn leaves the Tokyo Detention House in Tokyo, Japan April 25, 2019.

LONDON (Reuters Breakingviews) - Renault is on a campaign of de-Ghosnification. Chairman Jean-Dominique Senard is axing advisers linked to the former chief executive, and recent Japanese jailhouse guest, Carlos Ghosn, helping Senard put a firmer personal stamp on the carmaker. But with a government shareholder still breathing down his neck, any hopes of reigniting merger talks could easily be dashed. Investors in the 16 billion euro French group are still rueing a collapsed deal with Fiat Chrysler Automobiles. The proposed combo promised about 5 billion euros of annual cost savings, Fiat reckoned, but fell apart in early June after the Italian-American carmaker decided “political conditions in France do not currently exist for such a combination to proceed”. So, Senard is clearing house. Renault is parting ways with Ghosn’s long-time financial advisers Ardea Partners, according to people familiar with the matter. The boutique, founded by former Goldman Sachs bankers, proved controversial in Paris because it was advising Renault on the Fiat deal while one of its top executives sat on Fiat’s board. Renault is also severing ties with Ghosn’s favoured communications shop Les Rois Mages, run by Claudine Pons, and security consultant Alain Bauer. Management changes within the company are also likely. It’s healthy to put some distance between the embattled carmaker and its former boss, who denies accusations of financial impropriety made by Renault’s alliance partner Nissan and prosecutors in Tokyo. The French group’s 15% government shareholder might understandably balk at any association with the disgraced former executive. But shuffling around the advisory deckchairs does little to remove the primary roadblock to a merger with Nissan or Fiat, or both. The former deal would help solidify the alliance and eliminate the huge valuation discount investors apply to Renault’s 43% stake in the Japanese group. The latter option would give Senard a larger fleet of cars over which he could spread the French group’s electric-vehicle technology, and the costs sunk to achieve it. The real obstacle is the French state, whose request to postpone Renault’s board meeting on the Fiat deal caused Senard’s opposite number, John Elkann, to pull the offer, and whose double voting rights understandably make Nissan wary of political meddling. Finding advisers clever enough to overcome that impediment will be a tougher call.

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