Renault SA pays Nissan Motor Co. Ltd. $5.4 billion to acquire a 36.8 percent stake of Nissan Motor and 22.5 percent stake of Nissan Diesel.
Renault obtains Nissan bonds with detachable warrants that can increase Renault's stake to 39.9 percent after four years, and 44.4 percent after five years. Those warrants are priced at 400 yen per share, the market price for Nissan when the deal closed.
Renault can buy Nissan Europe's financial subsidiaries for $320 million.
Should another shareholder come to own more than 20 percent of Nissan, Renault can increase its percentage even more. Renault is not liable for any of Nissan's debt obligations.
How the Renault deal is expected to reduce Nissan's $19.9 billion debt in three years
$13.7 billion in debt reduction:
$5.4 billion in Renault capital infusion
$3.4 billion from improved cash flow
$2.7 billion in sales of noncore businesses
$1.7 billion from synergies between the two companies
$500 million from reduction of inventories
What's left: $6.2 billion in debt, or a 50 percent debt/equity ratio
Who goes where
Position: Renault executive vice president with responsibilities for vehicle engineering, powertrain operations, purchasing and manufacturing, will be appointed COO of Nissan
Position: Renault vice president and capital expediture controller, will be appointed managing director and deputy CFO of Nissan
Position: Renault senior vice president of vehicle development and member of the management committee, will be appointed executive vice president of product planning and strategy at Nissan, as well as a member of the board
Position: Nissan president and CEO, has been proposed to join the Renault board of directors. Also likely to become chairman of Nissan.