Renault, Nissan Agree to GM Talks; GM to Decide Thursday

04 July 2006

Enthusiasm for the mooted alliance between ailing auto giant General Motors and its European and Japanese rivals - Renault of France and Nissan of Japan [WAMN: 03-Jul-06] - is gaining momentum.

Yesterday (Monday) the respective boards of the French and Japanese groups - who already share a walk-on-water chief executive in Carlos Ghosn - voted in favour of exploring such a deal.

The pressure is now on the GM board to make a similar decision, the screw being tightened by major stockholder and the scheme's principal proponent, Kirk Kerkorian.

Although GM yesterday denied official comment to the besieging newshounds, three insiders let it be known that its board will resume discussions on Thursday via an already scheduled conference call.

Kerkorian, whose investment vehicle Tracinda Corporation owns 9.9% of GM stock, has floated a $3 billion (€2.35bn; £1.63bn) plan under which Renault and Nissan would each buy 10% stakes in the US giant. Together with Kerkorian's 9.9%, this would place around thirty percent of GM in foreign hands.

Rick Wagoner, GM's beleaguered ceo has already tabled his own recovery plan to the board and Thursday's meeting could well boil down to a straight and painful choice between Wagoner and the interlopers.

Meantime, the Renault board endorsed Ghosn's resolution that exploratory discussions with GM. could start if the US automaker "makes the proposal". Nissan's directors voted likewise . . . "if General Motors Corporation supports and endorses the proposal made by its shareholders".

Data sourced from New York Times and; additional content by WARC staff