Nissan Explores Break-Up Via

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Nissan, struggling to recover from the pandemic-induced downturn, could sell its stake to a Mitsubishi group company such as Mitsubishi Corp

Nissan is reportedly looking to sell some or all of its 34% stake in Mitsubishi Motors, in a move that would reshape a three-way alliance that includes France’s Renault.

“There are no plans to change the capital structure with Mitsubishi,” a Nissan company spokeswoman said. A Mitsubishi Motors spokesman said the same, adding the company would continue to collaborate within the alliance.

Renault did not immediately comment.

Nissan, struggling to recover from the pandemic-induced downturn, could sell its stake to a Mitsubishi group company such as Mitsubishi Corp, which already owns a fifth of Mitsubishi Motors.

Such a deal would fundamentally alter a three-way partnership built by Carlos Ghosn, former chairman of the alliance, which plunged into confusion when he was arrested in 2018 on charges of financial misconduct.

Mr Ghosn had wanted a full merger of Renault and Nissan, which was shelved as the companies decided to fix the troubled alliance. The pandemic has, however, compounded problems and made a recovery hard.

Nissan, which is 43% owned by Renault, last week cut its operating loss forecast for the year to March by 28%, helped by a rebound in demand, especially in China. Mitsubishi Motors, Japan’s sixth-largest carmaker, expects to post an operating loss of 140 billion yen (€1.1bn) for the business year.

Both companies are cutting production levels and costs in a bid to return to profitability.

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When Mr Ghosn rescued Mitsubishi Motors in 2016 with a $2.3bn investment and invitation into the alliance, it didn’t take long for him to boast about the “new force in the global auto industry.” He had even bigger plans — to create a holding company for a carmaking empire capable of dethroning Toyota and Volkswagen as the world’s biggest producer of cars.

All that changed in November of 2018, when Mr Ghosn and former Nissan director Greg Kelly were arrested in Tokyo and accused of underreporting the former chairman’s compensation. Both have denied wrongdoing. Additional charges were filed later accusing Mr Ghosn of using company assets improperly, which he has denied.

“The best thing is to end the alliance,” said Tokyo Tokai Research analyst Seiji Sugiura, a frequent critic of the partnership who has written extensively about the companies in Japanese periodicals. “They should either become one, or split.”

A sale would only bring in a relatively modest sum of cash. The holding was worth about $950m at the close of trading last week, less than half what Nissan paid four years ago.

While a share sale would fundamentally reshape Nissan’s capital ties with one of its key partners, the three carmakers will probably make the case that the alliance remains intact operationally. They will emphasise the partnership can work without the shareholding and that the sale may also free them to collaborate with other partners, one source said.

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