Renault: Oddo sees 'rebalancing' to Nissan's advantage
(CercleFinance.com) - The day after Carlos Ghosn's arrest in Japan, Oddo BHF has published a report analysing the potential consequences of this event on the Alliance between Renault and Nissan, saying that challenging their links would be "very difficult".
Renault and Nissan are now too interwoven industrially for the operation of the Alliance to be called into question.
This is the result of 20 years of work for thousands of employees at both companies, which has generated significant industrial synergies (5 billion euros per year at the end of 2017; 10 billion euros in 2022). (...) Indeed, it has taken 20 years for Renault and Nissan to reach this level of integration.
Any backtracking would mean a significant increase in the cost of development costs and variable costs that would jeopardise the sustainability of Renault and Nissan, Oddo BHF says. "Ghosn's dismissal from the top spot at Nissan (as probably will probably be the case at Renault) and the parallel reinforcement of Hiroto Saikawa (hostile to this change) distances the prospect of a merger that was the most satisfactory outcome.
However, the broker does not rule out the possibility of a reduction in Renault's stake in Nissan, which, although definitely return cash, would change the balance of the Alliance by giving extra voting rights to Nissan. Oddo BHF maintains its buy rating on the Renault share, with a target price of 105 euros.
Copyright (c) 2018 CercleFinance.com. All rights reserved.
The information and analyses distributed by Cercle Finance are only intended as decision-making support for investors. Cercle Finance's responsibility may not be entailed, either directly or indirectly following the use of such information and analyses by readers. Any non-professional investor is recommended to consult a professional advisor before making any investment decision. This indicative information in no way constitutes any invitation to sell or buy securities.
Renault and Nissan are now too interwoven industrially for the operation of the Alliance to be called into question.
This is the result of 20 years of work for thousands of employees at both companies, which has generated significant industrial synergies (5 billion euros per year at the end of 2017; 10 billion euros in 2022). (...) Indeed, it has taken 20 years for Renault and Nissan to reach this level of integration.
Any backtracking would mean a significant increase in the cost of development costs and variable costs that would jeopardise the sustainability of Renault and Nissan, Oddo BHF says. "Ghosn's dismissal from the top spot at Nissan (as probably will probably be the case at Renault) and the parallel reinforcement of Hiroto Saikawa (hostile to this change) distances the prospect of a merger that was the most satisfactory outcome.
However, the broker does not rule out the possibility of a reduction in Renault's stake in Nissan, which, although definitely return cash, would change the balance of the Alliance by giving extra voting rights to Nissan. Oddo BHF maintains its buy rating on the Renault share, with a target price of 105 euros.
Copyright (c) 2018 CercleFinance.com. All rights reserved.
The information and analyses distributed by Cercle Finance are only intended as decision-making support for investors. Cercle Finance's responsibility may not be entailed, either directly or indirectly following the use of such information and analyses by readers. Any non-professional investor is recommended to consult a professional advisor before making any investment decision. This indicative information in no way constitutes any invitation to sell or buy securities.