There is no alliance that has worked as well as the Renault-Nissan alliance. This is making the partnership balanced

Louis Schweitzer Renault

"We are confident of the unity we have been building," Nissan chairman Yoshikazu Hanawa said after signing an agreement in Paris with Renault chairman Louis Schweitzer.

"Our workers don't feel the distinction between being with Renault or Nissan."

When Renault initially bought its holding in Japan's second-largest automaker in May 1999, the deal allowed Nissan to buy into Renault when it was financially able.

Under French law, Nissan's shares in Renault will not entitle it voting rights.

Closer ties

Nissan will buy a 15% stake in Renault, which in turn will up its stake in Nissan to 44.4% from the current 36.8%.

The Nissan shares will cost Renault 216bn yen ($1.8bn), while the price for the 42 million Renault shares will be calculated over an average of 20 trading days and is expected to cost Nissan about 1.4bn euros ($1.3bn).

The carmakers also set up a joint venture to co-ordinate their global product development, financial policy and corporate strategy.

To give the alliance more independence, the French government announced it would reduce its stake in Renault from 44.2% to 25%, through a public offering.

The deal still needs government regulatory approval.

Nissan turnaround

"This is making the partnership balanced," said Renault chairman Louis Schweitzer.

When Renault first bought into Nissan it was seen as a bail-out deal. Since then, the Tokyo-based carmaker has made a sharp recovery.

Renault executive Carlos Ghosn, who took control at Nissan, closed plants and cut the work force.

Before then, Nissan had made losses in seven of the preceding eight years.

Nissan reported a 331bn yen ($2.7bn) profit for the fiscal year ending in March and expects results from the first half of this year to be up 34% from a year ago.

For the first nine months of 2001, Renault's revenue rose 6.8% to 27bn euros ($25bn), due to Nissan's recovery.