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Renault eyes Nissan deal
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January 18, 1999: 7:57 a.m. ET
Auto makers in talks, but any pact seen as very complicated
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LONDON (CNNfn) - Consolidation among world auto makers moved a step closer Monday when France's Renault confirmed it is talking with Japan's Nissan, as well as other parties in Asia.
Speculation has swirled around the sector for months, fueled by the need for auto companies to achieve critical mass.
Analysts welcomed talk of an agreement between Renault and the financially-strapped Japanese carmaker, although they warned that pulling off a deal will be complicated.
Press reports also suggest Renault could be one of three companies taking a peek at Scania, the Swedish truck maker. Volvo bought a 13 percent stake in its domestic rival Friday, in what analysts said was an unsolicited approach. Germany's Volkswagen is the other company said to be running its eye over Scania.
Renault's interest in Nissan comes as tortuous negotiations continue between the Japanese firm and DaimlerChrysler over Nissan's heavy truck unit.
Analysts say DaimlerChrysler and Renault could join forces to carve up Nissan, although such a deal would be difficult to put together.
"A deal with Nissan could be a good move," said a London-based analyst who didn't wish to be named, "Renault's problem is it's too small and too European."
Others pointed out that an outright takeover of a Japanese automaker has never been achieved and could prove troublesome.
Taking a minority stake in Nissan to cement some sort of joint venture agreement might not be welcomed by the financial markets.
"What good is a 20 percent stake? There's no control and little influence," said a Paris-based analyst, adding, "who wants 20 percent of a loss-making, deeply-indebted company?"
Analysts are united in their admiration for the industrial logic of a Nissan/Renault deal, pointing out that Renault's design expertise would neatly complement Nissan's superb production efficiency. In terms of geography Nissan would offer the French group a presence in Asia and North America.
Despite the market skepticism, somebody thinks a deal can be done. Nissan shares jumped 5 percent in Japan overnight, and Renault stock bolted 5 percent higher in European trading Monday.
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Renault
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