TOKYO - Nissan Motor Co. President Yoshikazu Hanawa last week made no secret of the fact that a significant chunk of Japan's second biggest automaker is now on the block.
Both DaimlerChrysler AG and Renault SA confirmed they are talking to Nissan, and other suitors appear to be in the wings.
Despite all the interest, though, don't bet on a quick sale.
Analysts say several major hurdles stand in the way. The main one: Nissan's debt load of some ¥2.5 trillion, or about $22 billion. The company also has predicted a loss of $265 million in the current fiscal year, which ends March 31. It will be Nissan's sixth loss in seven years.
Speaking at a Tokyo press conference Friday, Jan. 22, DaimlerChrysler Chairmen Juergen Schrempp and Robert Eaton confirmed that 'constructive discussions' with Nissan continue regarding possible stakes in Nissan Diesel and/or Nissan Motor.
Schrempp said he expects Asia to account for 25 percent of DaimlerChrysler revenue within 10 years. For Japan, he said, that 'will include producing locally ... of course, working through local partners.'
Buying Nissan could cut years off that timetable.
Adding Japanese culture to his company's newly mixed German and American cultures would be a management challenge, Schrempp said.
'But I'd love to have that challenge,' he said.
Putting Daimler and Chrysler together may prove to be a breeze compared to buying a stake in Nissan, however. As Eaton said pointedly: 'We did not need months to make a case for this (DaimlerChrysler) merger.'
Ironically, Nissan's troubles virtually dictate how large a share a suitor may take.
Acquiring more than 50 percent of Nissan, for example, would put its debt on the buyer's balance sheet, something few companies would be willing to do.
'You certainly don't want to be burdened with an unreasonable amount of debt,' said Mazda Motor Corp. President James Miller. 'You have to put some limits on debt in some way, whether it's write-offs or the level of equity.'
A share ranging from 3 percent to 30 percent would symbolize the beginning of closer ties between Nissan and a partner, but it would yield no real management control for the investor.
A small stake wouldn't do much for Nissan, either. Buying, say, 20 percent would cost about ¥200 billion, or about $1.8 billion, at Nissan's current stock price.
'But that doesn't mean anything,' said Koji Endo, deputy head of research at Schroders Japan Ltd. in Tokyo. A cash infusion that small 'would not guarantee Nissan will survive the next three years,' he said.
MAGIC NUMBER: 33.4%
Under Japanese law, however, an interest of 33.4 percent to 50 percent would give a buyer veto power over any Nissan board decision without giving Nissan's creditors any claims to the foreign company's assets. Hanawa has stated he is willing to sell a stake in that range.
Selling just over one-third, then, could give Nissan the funds it needs to rebuild and could give the buyer the freedom to make necessary changes.
'The most important thing they need is good management' from a new owner, said an auto analyst in Tokyo who asked not to be identified.
Renault, meanwhile, is interested in Nissan's technology as well as its presence in Asia and North America.
'Nissan's technology is by far better than Mitsubishi's. They are good at chassis design, CVTs (continuous variable transmission), engines and hybrid power,' said a Renault executive who declined to be identified.
In Renault's view, he explained, Nissan is an excellent technical company that has been handicapped by bad management.
'They have spent the past 10 years running behind Toyota with ... cars that are well done but not appealing,' he said. 'However, we could do a lot with them.'
Staff Correspondent Stephane Farhi in Paris contributed to this report