Paris, France - Renault Shares Gain Amid Merger Speculations

Renault's shares experienced a significant 6% surge on Wednesday, as market analysts pointed out the potential financial and strategic advantages for the automaker stemming from ongoing merger discussions between Honda and Nissan.

Japan's second and third largest car manufacturers are reportedly in advanced talks to strengthen their ties, which could potentially lead to a full merger. This move comes as both companies face increasing pressure from competitors like Tesla and Chinese automakers.

Renault currently holds a 17% stake in Nissan and an additional 18.7% through a French trust, making it Nissan's largest shareholder despite the scaling back of their long-standing alliance last year.

On Wednesday, Renault's shares were the second-highest gainers on the pan-European STOXX 600 index following the news report.

While Renault has not publicly commented on whether it would consider selling its shares, sources familiar with the matter have indicated that Renault is open to the idea of pursuing merger talks with Honda.

Short-term benefits for Renault include bolstering Nissan's stock, thereby increasing liquidity as Renault continues its strategy, initiated late 2023, of divesting its shares in its Japanese partner, according to Jefferies.

Additionally, the potential merger could provide Renault with a buyer for a significant portion of its remaining stake in Nissan, currently valued at almost 3 billion euros ($3.15 billion), as suggested by Oddo analysts.

Based on current market values, Honda shareholders would control around 85% of the new company, with Nissan shareholders holding the remaining share. Renault, with its current stake in Nissan, would hold slightly more than 5%.

Oddo analysts also noted that Honda could become a new client for Renault's electric vehicle unit, Ampere, in Europe. Nissan, already a key client, relies on Renault for its Micra production in Europe and will use Renault's Twingo electric platform for a future model.