NSANY Nissan Motor Company Ltd (PK)

TOKYO—Nissan Motor Co. is considering raising its stake in alliance partner Renault SA to at least 25% from the current 15%, among other options, a person with knowledge of the matter said Tuesday. The move could be potentially costly for the Japanese car maker as it tries to limit the French government's influence.

The government is Renault's biggest shareholder, and is set to double its voting rights in April under a recent law. When the law comes into effect, the government's 19.7% stake would turn into 32.8% voting rights, effectively giving the government veto power.

On Monday, Nissan held an extraordinary board meeting to discuss the Renault-Nissan alliance and the French government's recent moves, people with knowledge of the matter said.

The board discussed various options to counter the government's moves, including increasing Nissan's stake in Renault to at least 25%, one person said.

Under Japanese law, that would nullify Renault's voting rights in Nissan, and as a result, limit both Renault's and the French government's influence over Nissan.

"Nissan's basic stance is that it wants to continue the alliance with Renault. But to do so, it is necessary that Nissan's independence is maintained and assured, and not dominated by a third party," the person said.

The board hasn't decided on any specific measures, the person added.

Such a move would likely be opposed by the French government, which has repeatedly said it is against significant changes in Renault and Nissan's cross-shareholding system. Renault holds a 43.4% stake in Nissan, while Nissan owns 15% of Renault.

It could also be costly for Nissan. Increasing its stake in Renault by at least 10 percentage points could cost Nissan around 2.8 billion euros at least, based on Renault's current market capitalization.

Nissan shares fell 2.8% Tuesday morning. The Nikkei business newspaper reported earlier that Nissan is considering raising its stake in Renault.

Another option under consideration is reducing Renault's stake in Nissan to below 40% and giving Nissan voting rights in Renault, people familiar with the matter said.

Under French cross-shareholding rules, Nissan has no voting rights in Renault unless Renault decreases its stake to below 40%.

Japan's main government spokesman said Tuesday that the parties should try to reach a consensus through discussions.

"The Japanese government will offer support if needed," Chief Cabinet Secretary Yoshihide Suga said in a news conference.

Nissan and Renault will continue discussions with the French government, people familiar with the matter said. Renault is set to hold its board meeting around Dec. 11, people familiar with the matter said.

Jun Hongo contributed to this article.

Write to Yoko Kubota at yoko.kubota@wsj.com

Subscribe to WSJ: http://online.wsj.com?mod=djnwires

(END) Dow Jones Newswires

November 30, 2015 23:15 ET (04:15 GMT)

Copyright (c) 2015 Dow Jones & Company, Inc.