Nissan to buy back 5% of own shares from Renault

Nissan will be buying back a 5% stake from Renault in a first stage of planned shareholding reduction, both companies have announced.

This is comprised of 211,000,000 shares in total, at a share price of 568.5 yen for a cost of 119,953,500,000 yen (RM3.9 billion), and Nissan says the transaction will be funded by its net cash position. This is the first in a series of share sales by Renault back to Nissan to reduce its stake in the Japanese carmaker to 15%, down from around 43%, according to Reuters.

Renault has placed 28.4% of its Nissan shares in a trust, and is expected to sell its holding gradually. Nissan, which has a right of first offer on the shares, will buy back the 5% stake. Nissan has decided to cancel all shares acquired in the buyback, the Japanese carmaker said in its statement.

Renault hopes the sale of the Nissan stake will help it regain an investment grade rating. Meanwhile, analysts said that the sale of the 28% Nissan stake could improve Renault’s cash balance by 4.2 billion euros (RM21.5 billion), and should boost investor confidence in the company’s cash reserves for executing its strategy, Reuters wrote.

Specifically, the 764 million euro (119 billion yen, or RM3.9 billion) cash inflow will cover financial investments made by the Renault Group this year, as well as planned investments for 2024, Renault said in its statement. With Nissan’s 15% stake in the group, the voting rights of Renault Group and Nissan will continue to be capped at 15%, it added.

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