Renault to sell Daimler stake for €1.2bn

Renault is selling its entire stake in Germany’s Daimler as it looks to pay off debt and bolster its finances to weather the pandemic.

The French carmaker said on Thursday it would sell its 1.5 per cent stake in Stuttgart-based Daimler, bringing in close to €1.2bn, based on the closing share price.

With the pandemic slashing demand for cars and a global chip shortage hitting the sector, Renault fell to a record €8bn loss last year.

Renault said the cash would allow it “to accelerate the financial deleveraging of its automotive activity”. Prior to the sale, the company had €3.6bn of net debt, compared with €1.7bn of net cash in 2019.

But it stressed its industrial partnership with Daimler “remains unchanged and is not impacted”.

Earlier this year new chief executive Luca de Meo, who joined the business in July, cited selling the Daimler stake as one of the options for the company when looking to raise money, saying there were “no taboos”.

He told the FT in January he would only look to sell the stake “if I have the opportunity to allocate that money in a place with triple the benefit”.

The stake in Daimler was built up in 2010 under the leadership of Carlos Ghosn as part of a strategic partnership between Renault, Nissan and Daimler that involved swapping equity positions and some collaboration on vehicle development.

Currently, Renault and Daimler collaborate on some vans and engine projects.

Separately, as part of its alliance with Nissan, Renault holds a 43 per cent stake in the Japanese carmaker. Nissan holds a 15 per cent stake in the French group. 

That alliance remains intact but it came under intense strain since the arrest of alliance-boss Ghosn in Japan in 2018, which exposed tensions between the two carmakers and meant Renault entered the pandemic in a precarious state.

Renault took on a €5bn state-backed loan to get through the crisis. And in an effort to right the company, De Meo is reducing factory capacity by a quarter, deepening cost cuts to €3bn by 2025, including 15,000 job cuts, and overhauling its brands in a turnround plan aimed at reviving its fortunes.