Renault to sell Daimler stake and continue partnership
The sale is an effort to secure capital after a record annual loss.
Renault SA has announced plans to sell shares in Daimler AG valued at €1.2 billion (R21 billion) to secure funds for its turnaround efforts following a record annual loss.
The European carmaker will exit its entire holding in Daimler, a roughly 1.5 percent stake. According to reliable sources, Renault already has enough demand for all the stock: the sources asked not to be identified because the information is confidential.
Profits from the sale will allow Renault to “fast-track the financial de-leveraging of its automotive activity,” the company said. Renault and Daimler said their industrial partnership that was started more than a decade ago will continue.
Last month, Renault cautioned investors of another difficult year ahead following a worse-than-expected €8 billion (R140 billion) annual net loss. Renault CEO Luca de Meo’s daily battles to keep plants open are hampering his attempt to steer the company out of the slump it’s been in since its previous CEO, Carlos Ghosn, was arrested in late 2018 on suspicion of financial misconduct.
Daimler shares have surged since the Mercedes-Benz manufacturer announced plans early last month to spin off its truck unit. The stock closed Wednesday at a three-year high, valuing the company at €77.1 billion (R1.3 trillion).
Renault informed Daimler in advance of its plan to offload its stake. BNP Paribas SA and HSBC Holdings are advising on the sale, according to sources close to the case. Renault will pay down debt and secure credit scores that have been given a negative outlook by Moody’s and Standard & Poor by selling its Daimler stake.
Renault and Daimler’s partnership dates back to 2010 where the two car makers often hosted joint press conferences at car shows. The pair had previously collaborated on the Smart ForTwo and Twingo cars.