(Bloomberg) -- Saudi Aramco is poised to take a stake of about 10% in a powertrain joint venture with Renault SA and China’s Zhejiang Geely Holding Group Co., according to people familiar with the plan, a smaller commitment than originally signaled by the world’s biggest oil company.
The transaction is set to value Horse Powertrain Ltd. at around €7.4 billion ($7.9 billion) with Renault and Geely keeping roughly 45% each, the people said, asking not to be named before the agreement was finalized. An announcement could come by month’s end, the people said.
Shares in Renault turned positive on the news, rising as much as 1% reversing earlier losses. The stock has gained 27% since the start of the year.
The three companies announced plans last year to make combustion engines and hybrid powertrains through a joint venture. Saudi Aramco said then that it planned to own as much as 20% of the company.
Spokespeople for Renault, Geely and Saudi Aramco declined to comment.
State-owned Saudi Aramco earlier this month sold stock raising $11.2 billion for Riyadh to help Crown Prince Mohammed Bin Salman’s ambitious plans to revamp the economy with investments including in sports, artificial intelligence, tourism and the desert project of Neom.
Horse will have 17 plants and 19,000 employees, and the capacity to supply more than 5 million internal combustion, hybrid and plug-in hybrid engines annually — most of the world’s global hybrid and internal combustion engine market.
--With assistance from Matthew Martin and Danny Lee.
(Updates with Renault shares in third paragraph. An earlier version corrected the timing of the Saudi Aramco share sale)
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