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Exclusive: France defends Renault stake increase in letter to Ghosn - sources

PARIS (Reuters) - French Economy Minister Emmanuel Macron has written to Renault RENA.PA boss Carlos Ghosn to defend the government's surprise stake increase in the carmaker and reject claims it endangers the Renault-Nissan alliance.

Carlos Ghosn, President and CEO of Nissan, unveils the new Nissan Maxima at the 2015 New York International Auto Show in New York City, April 2, 2015. REUTERS/Eric Thayer

The April 21 letter was shared with Renault board members and interpreted by some as a warning against retaliation, two people with knowledge of its content said on Thursday.

“What we are seeing is a real but silent struggle,” one source said. Government officials confirmed only that Macron had written to Ghosn, declining further comment.

France’s stake in Renault and influence over Nissan, which is 43.4 percent-owned by the French carmaker, has long been a sensitive matter, with critics in the alliance and Japan fearing Paris might put its own interests above those of the businesses.

Nissan holds a reciprocal 15 percent of Renault that is deprived of voting rights, another sore point in Tokyo, because Nissan is deemed to be under its alliance partner’s control.

France said on April 8 it had temporarily raised its Renault holding to 19.7 percent from 15 percent. Macron said the move would allow France to block Renault’s attempt to opt out of new legislation granting double voting rights to longer-term investors, including the government.

Ghosn’s “one share, one vote” proposal to maintain the status quo will be put to the April 30 shareholder meeting, with a two-thirds majority needed to pass the opt-out.

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By blocking the resolution, the government would increase its voting weight from the previous 17 percent to about 30 percent -- close to a blocking minority -- even after paring back its capital stake to 15 percent as it has pledged to do.

Since Renault rescued Nissan 7201.T from bankruptcy in 1999, the Japanese carmaker has outgrown its parent to account for two-thirds of their combined 8 million vehicle sales and a bigger share of profit.

Renault last week urged France to back down from its plan to maintain increased voting clout at Renault.

Following a board meeting, Renault warned that the “survival and success” of the alliance required the government’s voting weight to be restored to its earlier level.

Nissan officials also warned French board representatives that the Japanese company would take steps to counter any lasting increase in state influence, sources have told Reuters.

In its first statement on the unfolding power struggle, Nissan said on Thursday its own board had “unanimously decided to support the decisions made by the board of directors of Renault”.

In his letter, Macron told Ghosn that France remained in compliance with 2002 agreements underpinning the alliance and could not be accused of destabilizing it, the sources said.

Ghosn should not have been surprised by the stake increase, Macron added, because France voted against the opt-out proposal at a March 11 board meeting.

“He makes clear it’s not the government who is upsetting the balance,” one source said. “There is a warning between the lines.”

The standoff comes at a sensitive time, as Ghosn pushes through an ambitious Renault-Nissan convergence program under a handful of recently appointed lieutenants, deepening unease among Renault engineers.

Three of the four alliance-wide operational chiefs are Nissan executives, a fact that French officials also cite in conversations about the government stake increase.

A Nissan spokesman would not say whether Thursday’s board meeting had addressed possible retaliatory moves.

Measures considered in the past to “rebalance” the partnership have included a Nissan capital increase or the reduction of Renault’s stake below 40 percent. Either move could reactivate Nissan’s voting rights in Renault.

Additional reporting by Jean-Baptiste Vey; Editing by Mark Potter