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IB Nissan Negotiation

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Ashley Pollard

on 25 April 2011

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Transcript of IB Nissan Negotiation

1 Synopsis 2 Major Determinants 3 4 Nissan Negotiations Yellow Group Presentation 5 6 Reasons why agreement was made
Reasons for agreement conditions Individual Justifications Salient Features & Determinants Views from noncentral actors Strengths & Weaknesses AGENDA Renault SA agreed to
buy a 42% stake in Nissan motors for $5 billion and
assume 42% of the $31 billon debt-approximately $13 billion) Each company retains brand identity
Renault's CEO (Loius Schwietzer) as CEO of alliance DaimlerChrysler purchased 33.4% of Nissan Motor’s 39.8% stake in Nissan Diesel for $250 million Nissan POV:
Negotiations with DaimlerChrysler very quick
Disagreements regarding valuation of Nissan Renault POV:
distributive bargaining with Nissan
4 rules for effective bargaining:
separate people from problems
focus on interests, not people
invent options for mutual gain
insist on using objective criteria DaimlerChrysler POV:
Desired the 40% stake Nissan Motors had in Nissan Diesel (or 10% of Nissan Motors)
High awareness of Nissan's needs and BATNA's DaimlerChrysler POV:
33.4% stake over 40% stake to ensure DaimlerChrysler would not take over Nissan’s debt Renault POV:
Initial 45% offer not acceptable to Nissan
Only way to secure deal was to offer more money
Assumption of debt: ethical obligation
Keeping brand name of both
Organizational structure
Board of Directors structure
Nissan POV:
Focus on 'win-win' for all parties Nissan POV:
Valuate Nissan Motors against the auto industry average (meaning somewhere around $24 billion)
Final offer of $5B from Renault deemed 'fair Renault POV:
Valuation issues: market value of Nissan shares on the Tokyo Stock Exchange was around $12 billion
Inability to rely on success of Nissan's 1-year ($6B) plan for company turn-around DaimlerChrysler POV:
Japanese law protected DC from acquiring Nissan's debt at 33.4% stake
In case of termination, DC can sell only with Diesel's approval and agreement of liquidatoin
DC gets veto power in major decisions
Nissan agreed to share technical know-how and Diesel's distribution channels DaimlerChrysler POV:
Valuation concern/high investment risk of Nissan Motors
Focus switched solely to Nissan Diesel
Press releases helped clarify issues and speed process Renault POV:
Without tie-up with Nissan, Renault would eventually disappear from market
Nissan Motors offered portion of Diesel as part of deal
Nissan Roren's value-added plan
Email from Nissan Motors to Renault's CEO Nissan POV:
Comfort/Trust with Renault initially low
Email from Hanawa to Schweitzer focusing on synergy
Debt absorption Nissan Roren:
Main objective: protect as many jobs as possible
Union not marginalized; collaborative effort
Value-added plan offered
French POV:
Negotiations overall were constructive and mutually respectful
Despite technically being a multi-party negotiation, often felt like 2-party between C-level execs Goldman Sachs & Co:
No group seemed marginalized though roles of Nissan Roren and Goldman Sachs representative were less integral
Frustration at lack of power in proceedings
DC/Nissan deal completed with relative ease; Renault/Nissan deal more heated STRENGTHS Nissan: Tough, hard-ball tactics; procedural organization; ability to form a united front, well-prepared Renault: ‘Upper hand’; alignment on position; well-prepared DaimlerChrysler: Ability to walk away, build rapport, and uncover underlying interests; well-prepared Weaknesses Nissan: Lack of confidence; uncertainty; inability to ‘bluff’ due to everyone having equal information Renault: Lack of confidence; uncertainty; inability to ‘bluff’ due to everyone having equal information DaimlerChrysler: Lack of confidence; uncertainty; inability to ‘bluff’ due to everyone having equal information; missing concrete information (aka #’s) to back up demands; too much trust 1. Synopsis
2. Major Determinants
3. Individual Justifications
4. Salient Features & Determinants
5. Views from noncentral actors
6. Strengths & Weaknesses
Full transcript