DETROIT: Backfiring US automaker General Motors awaits Nevada billionaire Kirk Kerkorian's next move, following his announcement that he intends to raise his 9.9% stake in the business.
Kerkorian's strategy in buying up to 12 million extra shares for around $400 million (€315.6m; £213.8m) is designed to increase pressure on GM to cement an alliance with rivals Renault of France and Nissan of Japan [WARC News: 03-July-06].
Analysts say additional shares would give Kerkorian more leverage to demand an independent financial review of a possible deal.
GM ceo Rick Wagoner is publicly cool to the idea of forging formal ties with Renault and Nissan and said recently: "It's not logical or responsible to say we must have a partner to recover."
GM, which lost $10.6 billion last year and $3bn through the first half of 2006, has cut more than 30,000 factory jobs and taken steps to reduce healthcare and pension costs aimed at shaving $9bn in annual outgoings.
Despite the parlous state of GM's finances, many industry experts believe the talks currently taking place between the three car makers are unlikely to bear fruit.
The US company last week hinted it might want a multibillion-dollar dowry from Renault and Nissan to reach an agreement, an idea roundly dismissed by their mutual ceo Carlos Ghosn.
Waiting in the wings, reportedly, is the equally troubled Ford Motor Company which has apparently approached Gohsn about a potential alliance if the talks with GM fall apart.
Data sourced from New York Times and latimes.com; additional content by WARC staff