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Renault : Deal with Nissan completed

Tokyo. March 27, 1999 - Louis Schweitzer, Chairman and Chief Executive Officer of Renault, and Yoshikazu Hanawa, President and Chief Executive Officer of Nissan Motor Co., jointly announced today a global partnership agreement that would create the fourth largest automaker in the world, while achieving profitable growth for both partners.

In order to support Nissan's turnaround, Renault has decided to make a major contribution to reducing Nissan's indebtedness. Renault is, therefore, going to invest 605 billion yen (approximately 4.7 billion euros / FRF 31 billion / US$ 5.1 billion), by taking a 36.8% equity stake (and corresponding voting rights) in Nissan Motor Co., by means of a reserved capital increase at Y 400 per share, and a 22.5 % stake in Nissan Diesel. Nissan Motor will keep an identical equity participation to that of Renault in Nissan Diesel. Renault's investment also covers a possible participation in Automakers, Nissan's South African subsidiary, which will be proposed to the Board of this company. Furthermore, Renault benefits from bonds with detachable warrants for a period of 5 years. These warrants, included in the overall price, enable Renault to maintain the level of its equity participation or increase it within mutually agreed limits.

Nissan has the option of taking a stake in Renault's share capital at a later date.

Further, a mutual agreement should allow Renault to purchase Nissan's European financial subsidiaries, for a total of approximately 294 million Euro (FRF 1.9 billion / Y 38 billion / US$ 320 million) .

  • 3 Renault Executives appointed to Nissan Board

In order to strengthen Nissan's management and ensure the return to profit for the year ending March 31, 2001,

Carlos Ghosn, currently Executive Vice President of Renault, will be appointed Chief Operating Officer of Nissan. All the Executive Vice Presidents of the company will report to him. In addition, two executives from Renault are appointed to the Board of Directors of Nissan:

Patrick Pelata, currently Senior Vice President, Vehicle Development of Renault, is appointed Executive Vice President, Product Planning and Strategy of Nissan.

Thierry Moulonguet, currently Vice President, Capital Expenditure Controller of Renault, is appointed Managing Director, Deputy Chief Financial Officer of Nissan.

It also has been decided to propose the appointment of Yoshikazu Hanawa, President and Chief Executive Officer of Nissan Motor Co., to the Renault Board of Directors.

The links between Renault and Nissan will allow each partner to derive maximum benefits from each partner's strengths. These strengths have been carefully determined after eight months of joint assessments and will improve the competitiveness of this new partnership.

Renault and Nissan will implement synergies covering the whole scope of their activities, particularly in the areas of purchasing, product strategy and research. They plan to develop a common line of platforms and powertrains. These synergies will also apply to the strong complementarity of their geographical locations. All expected synergies will represent a global cost saving of US$ 3.3 billion ( FRF 20 billion / Y 390 billion / 3 billion Euro) for the 2000-2002 period alone.

  • Transitional Organisation introduced

A transnational organization has been created to define joint strategy and promote synergies within the new entity. A Global Alliance Committee, consisting of the Chairman and Chief Executive Officer of Renault and the President and Chief Executive Officer of Nissan Motor Co., together with five top Renault executives and five top Nissan Motor Co. executives, will be in charge of strategic direction of the partnership.

  • Cross functional teams will execute PMI

Eleven Cross Company Teams will be assigned the task of promoting all possible synergies to be implemented by each of the partners. Four of these teams will focus on the following areas:

  • "Product planning and related strategy",

  • "Powertrains",

  • "Vehicle Engineering",

  • "Purchasing and logistics".

Seven other teams will be assigned to marketing and sales in different geographical areas:

  • Japan,

  • Asia-Pacific,

  • North and Central America,

  • South America,

  • Europe,

  • CIS -Turkey / Romania / North Africa, the Middle East and sub-Saharan Africa.

With the exception of the "Product planning and related strategy" group which will be under joint leadership, each of the other groups will be led by a manager from one company, whose appointment will be based solely on competence and recognized expertise. The deputy leader will automatically be an employee of the other partner.

Nissan and Renault will cooperate and comply with the national and international procedures necessary for the implementation of the agreement signed on March 27. The closing date for a capital transfer of funds is scheduled for the end of May 1999.

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