Renault to sell $1.4 billion Daimler stake to reduce debt

The French automaker Groupe Renault announced Thursday it would sell its 16.45 million stake in Germany’s Daimler AG in order to secure funds for its turnaround efforts after a record annual loss.

In an official statement issued late last night, the Renault Groupe said: “Renault SA announces today that it intends to sell its entire stake in Daimler A.G (i.e. 16,448,378 shares, representing 1.54% of the share capital of Daimler) through a placement to qualified investors, as defined in Article 2 point (e) of Regulation (EU) 2017/1129 as amended, by way of an accelerated bookbuilding process.”

Proceeds from the sale of stake in Daimler will allow Renault to “accelerate the financial de-leveraging of its automotive activity,” the company said. (Image credit: Gudea Rares / Shutterstock.com)

Based on Daimler’s closing share price of 72.09 euros per share on Thursday, Renault’s stake would be worth a little more than 1.18 billion euros ($1.41 billion).

A turnaround drive 

The French automaker, with its Japanese partner Nissan Motor Company Ltd., had exchanged stakes with Daimler in 2010 to strengthen their industrial partnerships. Renault holds 43% of Nissan, while Nissan has a 15% non-voting stake in Renault.

The company added in its statement that its industrial partnership with Daimler, which dates back more than a decade, remains unchanged and is not affected by the transaction.

Proceeds from the sale of stake in Daimler will allow Renault to “accelerate the financial de-leveraging of its automotive activity,” the company said.

The automaker warned investors last month that another challenging year is ahead after recording a worse-than-expected 8 billion-euro annual net loss.

Renault CEO Luca de Meo has been occupied with the ongoing global chip shortage which had made it impossible to keep plans open. To further complicate matters, the company is attempting to recover since the arrest of its long-time leader Carlos Ghosn in Japan in late 2018 on suspicion of financial misconduct.

Daimler shares have surged since the automaker announced plans early last month to spin off its truck unit. The company’s stock closed Wednesday at a three-year high.

Fitch Ratings downgraded Renault thrice last year, and expects weakness at least for a couple of years.

Renault and Daimler’s past collaboration included working together on Smart ForTwo and Renault Twingo cars. In early 2019, Daimler announced plans to team up with Zhejiang Geely Holding Group, its largest shareholder, to form a JV and turn Smart into an all-electric brand based out of China. 

Anna Domanska
Anna Domanska is an Industry Leaders Magazine author possessing wide-range of knowledge for Business News. She is an avid reader and writer of Business and CEO Magazines and a rigorous follower of Business Leaders.

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