Business

Renault shares jump after Nissan merger report

Renault plant Image copyright Getty Images

Shares in French car maker Renault have jumped 5.4% at the opening of trading after a report that it is in merger talks with Japanese car giant Nissan.

Bloomberg reported that the companies are discussing becoming one entity with a single stock.

The companies have been in a strategic alliance since 1999.

Asked about the report, a spokesman for Renault-Nissan said: "We do not comment on rumours and speculation."

Earlier in March, Reuters reported that Renault and Nissan were discussing plans for the Japanese carmaker to buy most of the French state's 15% Renault holding.

The alliance between the firms includes sharing engines and building smaller vehicles on a common architecture.

Japanese car firm Mitsubishi is also part of the alliance.

In 2016, Renault, Nissan, and Mitsubishi had combined sales of 9.96 million - which was one in nine of all vehicles sold worldwide.

The alliance had the fourth largest number of sales in 2016 behind Volkswagen Group, Toyota, and General Motors.

Professor Christian Stadler of Warwick Business School said: "Markets tend to be enthusiastic about big mergers. Rarely, however, do these mergers live up to expectations."

On the plus side, "the two firms have a long established and successful alliance", he says.

But the downside is that it is hard to see how a merger could add much to what the firms could already do in an alliance, he said.