Nissan and Renault may merge and create a new company

Renault SA and Nissan Motor Co. are in talks to merge and create a new company, according to information obtained by Bloomberg.

The two companies are currently in an alliance – Renault owns 43 percent of Nissan, while Nissan has a 15 percent stake in Renault.

The two companies are discussing a transaction in which Nissan would give Renault shareholders stock in the new company, sources say. Nissan shareholders would also receive shares in the new company in exchange for their holdings.

The new automaker may keep headquarters in both Japan and France.

As a result of the rumours, Renault shares had a sharp rise of as much as 8.3 percent in early trading today.

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Bloomberg writes that it could be very difficult for such a deal to be made, however, due to the fact that the French government owns 15 percent of Renault and may not want to give up control or lose the strength of its position. Furthermore, as both the French and Japanese governments would have to approve the deal, disagreements may appear on where the new company is domiciled.