French car manufacturer Renault SA and Japan's Nissan Motor Co. Ltd. are in talks to merge into one company and trade as a single stock, Bloomberg News reported.
People with knowledge of the matter told the news outlet that Carlos Ghosn, chairman of both companies, is heading the negotiations and would lead the combined company. A potential deal would award Nissan stock to Renault shareholders in a new company, while Nissan shareholders would receive shares in the combined entity in exchange for their holdings.
The French automaker currently has a 43% stake in Nissan, while the Japanese company owns 15% of Renault.
Talks may not succeed, according to the report. The French government might be reluctant to sell its 15% stake in Renault and both the French and Japanese governments could differ on where the combined company would be domiciled.
Renault's shares reached their highest intraday trading level in more than a decade in early trading March 29 and were up 4.69% to €97.48 as of 6:24 a.m. ET. Nissan was down 0.45% to ¥1,094.50 at market close.
Nissan is also the largest shareholder in Mitsubishi Motors Corp., after acquiring a $2.3 billion stake in October 2016.
The three companiesannounced the launch of a number of projects earlier this month to accelerate convergence in key operational areas. The group announced a six-year plan last year to exceed 14 million units in sales and generate $240 billion in revenue. Ghosn said last month that the companies are working on a plan to make the alliance irreversible. He left his CEO role at Nissan to work on the partnership.