The Renault-Nissan Alliance and state corporation Russian Technologies have agreed to create a joint venture and give the Renault-Nissan Alliance an indirect majority stake in AVTOVAZ, according to a memorandum of understanding.
According to the memorandum, the Renault-Nissan Alliance and Russian Technologies will contribute their respective stakes in AVTOVAZ to a joint venture that will control AVTOVAZ, Russia's largest car company and maker of the iconic Lada brand.
Renault-Nissan plans to invest about US$750 million, which will give the French-Japanese car group 67.13% of the joint venture in mid-2014. The joint venture will then hold 74.5% of AVTOVAZ. The transaction is expected to be complete by 2014.
Renault, which purchased 25% of AVTOVAZ in 2008 and then helped AVTOVAZ pilot an aggressive turnaround, will invest about US$300 million in the joint venture. Nissan, which does not currently own a stake in AVTOVAZ, will invest about US$450 million. Renault and Nissan will make periodic payments through 2014.
Carlos Ghosn, Renault-Nissan Alliance chairman and CEO, said: “Today's memorandum is the latest step in an expanding collaboration that helps modernize the leader of Russia's auto industry.
"Just as Renault and Nissan will continue their technology transfer to AVTOVAZ plants, our AVTOVAZ colleagues will contribute more and more to the Alliance's multicultural management bench."
The Renault-Nissan Alliance will perform financial, legal and environmental due diligence over the coming months. The parties expect to sign definitive agreements and close the transaction by the end of 2012, subject to customary regulatory approvals.
Renault, Nissan and Lada are launching a product offensive that will update all core Lada models and launch new cars across the three brands.