Renault shares accelerate on Nissan merger talk

Renault shares jump after Nissan merger report

Renault shares jump after Nissan merger report

As per Janet Lewis, an analyst, "Size matters in the auto industry", "The concern has always primarily been the French government, and somewhat Japan, because both France and Japan like to keep their national champions".

A possibility would be basing the new business in the Netherlands or London, where cross Atlantic automaker Fiat Chrysler has the company's corporate charter, but has its headquarters in both the US and Italy.

The parties are discussing a transaction in which Nissan would essentially give Renault shareholders stock in the new company, the people said. Also, the French government still owns 15 percent of Renault and may be unhappy to reduce its impact.

Insiders told Bloomberg that the two companies, which formed an alliance in 1999, would operate as a single corporation similar to the Volkswagen Group. The shareholders of Nissan will also receive stocks in the combined entity in lieu of their assets.

Carlos Ghosn, the current chairman of both companies would be heading this new company. The automaker may maintain headquarters in both Japan and France.

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Shares of Renault were up 8.3% in early Thursday trading, hitting their highest level intraday in over a decade. Nissan shares are down almost 2% over the past year, giving the company a valuation of 4.6 trillion yen ($43 billion).

In an interview with AFP earlier this year, Ghosn said the French carmaker is keeping all options open regarding its alliance with Nissan and Mitsubishi, another Japanese carmaker in which Nissan holds a stake. According to our source, talks between the two companies have been ongoing for several months now and there's still no final decision taken.

The companies are seeking to double synergies to 10 billion euros ($12.2 billion) by 2022 from 2016.

"They decide to be here or to get out", he said.

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