Friday, November 22, 2024

Nissan Enters New Era of Turmoil as Effissimo Takes Stake

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(Bloomberg) — Nissan Motor Co.’s rapid decline has drawn the attention of one of the most influential activist investors in Japan, adding a fresh dose of uncertainty to the automaker’s turnaround plans.

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A fund controlled by Effissimo Capital Management Pte, which has a history of pushing for change in Japan, has taken a stake in Nissan just days after cratering profit and sales induced by an outdated lineup, pricey dealer incentives and lack of hybrids in North America forced the Japanese carmaker to slash jobs and production.

The big question is whether Chief Executive Officer Makoto Uchida, who pledged to add 27 new electrified vehicles by 2030, can deliver a turnaround or be forced to make more drastic changes by an influential outsider.

“It really could be all over,” said Amir Anvarzadeh, Japan equity strategist at Asymmetric Advisors, comparing Uchida’s choices to the ones made by former Chairman Carlos Ghosn after he arrived at Nissan following the carmaker’s bailout by Renault SA in 1999.

Ghosn staged a remarkable turnaround in a few short years, delivering Nissan’s biggest-ever profit by cutting inefficient suppliers and introducing a slew of new models.

“Those were easy options in the 90s and it will take a miracle to turn this around,” Anvarzadeh said.

The past week’s developments mark a new phase of uncertainty for Nissan. The carmaker has been clawing its way back since Ghosn’s ouster, although Uchida has already overseen one round of cost cuts and the dismissal of his chief operating officer Ashwani Gupta.

Nissan shares rose after Effissimo, a Singapore-based hedge fund that buys into distressed companies, was identified as the buyer of the stake via intermediaries. The fund took on Toshiba Corp. a few years ago, with the conglomerate’s chief executive officer resigning in 2021 after the fund accused him of infringing on shareholders. Toshiba accepted a buyout offer two years later.

John Seagrim, a broker at CLSA in London, said that Effissimo will probably seek to resolve issues around governance and minority shareholders rights at Nissan Shatai Co., which is 50% controlled by Nissan. The fund also owns 30% of the subsidiary, a stake that it has held for more than a decade.

“What is less clear is whether Effissimo intend not just to deal with Nissan Shatai, but with Nissan itself,” Seagrim wrote in a note.

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