Renault SA and Nissan Motor are holding talks to merge and create a new entity that trades one stock, said sources close to the matter.
A new deal would end an existing alliance between the two automakers and make them into one, said the sources, who requested anonymity due to the details not being made public.
Currently Renault is 43% owner of Nissan while Nissan has a stake of 15% in its counterpart from France. Carlos Ghosn is chairman for the two companies and the driving force behind the current negotiations and if a deal is reached, would run the new combined entity.
The two parties are talking about a deal where Nissan would essentially give shareholders of Renault stock in the new business, said the people. Shareholders of Nissan would receive in addition new shares in the business in exchange for their current holdings. The automaker might maintain its headquarter in France as well as Japan.
Shares of Renault were up 8.3% in early Thursday trading, hitting their highest level intraday in over a decade. Shares of Nissan have been down close to 2% over the last year.
Getting a deal in place might prove difficult, said people close to the matter. The government of France is owner of 15% of Renault and might not be agreeable to relinquishing the control it has over its stake or have its 15% position watered down.
Both the Japanese and French government would need to approve this deal and might be very opinionated on the company, when it comes to where it is domiciled.
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 U.S. and Italy.
No decisions have been reached and talks, which have gone on for several months, might not result in any deal.
A Renault-Nissan alliance spokesperson said that the group did not comment on rumors or speculation while a spokesperson from the finance ministry in France declined to make a comment.
Earlier in March, Nissan was holding talks to purchase a large portion of the stake held by the French government.
The alliance between the two companies said that any discussions related to a share transaction involving two parties was pure speculation.