Nissan shares have climbed following an announcement from the Japanese automaker and its French partner Renault SA of a comprehensive revamp of their two-decade-old partnership putting them on an equal footing.
In early trading, Nissan’s stock rose as high as 3.1% before giving back gains. They gained 2.1% during the morning session, surpassing the slightly negative Nikkei 225 average (.N225).
In accordance with the agreement announced on Monday, Nissan and Renault will now hold 15% shares in each other, with Nissan’s portion including voting rights. Previously, Renault owned approximately 43 percent of the Japanese automaker, while Nissan had no voting rights.
Nissan executives had long been dissatisfied with the unbalanced character of the cooperation.
Following Monday’s announcement, Masayuki Kubota, chief strategist at Rakuten Securities, told Reuters, “The normalisation of the capital relationship will raise the amount of freedom Nissan has in terms of management, making it easier to adopt a strategy that focuses on the United States, China and emerging markets,”
It involves Renault transferring approximately 28% of the Japanese automaker to a French trust. This comprises a time during which shares cannot be sold and a standstill requirement, which imposes additional restrictions on stock sales.
Given that Nissan was unable to exercise its voting rights, the restructure addresses historical concerns regarding shareholder governance.
In the previous three years, Nissan’s stock has decreased by approximately 23%, lagging far behind Toyota’s 24% increase and Renault’s 4% increase.
Monday’s closing price for Renault shares was 4% lower after the agreement was announced.