GM Tie-up Talks With Renault and Nissan
The ailing carmaker General Motors has bowed to pressure from billionaire investor Kirk Kerkorian by agreeing to enter talks about a three-way alliance with Renault and Nissan.
The ailing carmaker General Motors has bowed to pressure from billionaire investor Kirk Kerkorian by agreeing to enter talks about a three-way alliance with Renault and Nissan.
Following a board meeting yesterday, GM said its chief executive, Rick Wagoner, would lead "exploratory talks" with the two rival manufacturers - despite suggestions earlier in the week that Mr Wagoner was resisting the proposal.
GM lost $10.6bn (£5.7bn) last year and has struggled to cope with competition from Japanese rivals in its home American market. It is cutting 30,000 jobs and closing 12 plants.
Mr Wagoner's recovery strategy has come under fire for being too slow from investors including Tracinda Corporation, an investment vehicle controlled by 89-year-old Mr Kerkorian, which has built a 9.9% stake.
In a statement, GM's board acknowledged that its decision to enter talks was "in response to a request made by Tracinda Corporation".
Mr Wagoner said: "We will enter into discussions with the managements of Renault and Nissan with an open mind - eager to hear their ideas of how an alliance between our companies might work to our mutual benefit.
"We periodically receive interesting proposals and we owe it to the company and its shareholders to explore how they might work, and to objectively weigh the potential benefits and issues that each might present."
Renault and Nissan are willing to pay as much as $3bn for a 20% stake in GM. A three-way tie-up would create an alliance producing 15m vehicles annually. By combining manufacturing facilities, the trio could produce huge savings in parts, components and labour.
Mr Kerkorian, a Las Vegas financier who once controlled the MGM entertainment empire, wants the boss of Renault and Nissan, Carlos Ghosn, to be given a boardroom role at GM. Mr Ghosn is nicknamed "le cost killer" and is credited with turning Nissan around.
GM's shares were up 2% following yesterday's announcement. A meeting between Mr Wagoner and Mr Ghosn is likely to take place in Detroit next week.
Following a board meeting yesterday, GM said its chief executive, Rick Wagoner, would lead "exploratory talks" with the two rival manufacturers - despite suggestions earlier in the week that Mr Wagoner was resisting the proposal.
GM lost $10.6bn (£5.7bn) last year and has struggled to cope with competition from Japanese rivals in its home American market. It is cutting 30,000 jobs and closing 12 plants.
Mr Wagoner's recovery strategy has come under fire for being too slow from investors including Tracinda Corporation, an investment vehicle controlled by 89-year-old Mr Kerkorian, which has built a 9.9% stake.
In a statement, GM's board acknowledged that its decision to enter talks was "in response to a request made by Tracinda Corporation".
Mr Wagoner said: "We will enter into discussions with the managements of Renault and Nissan with an open mind - eager to hear their ideas of how an alliance between our companies might work to our mutual benefit.
"We periodically receive interesting proposals and we owe it to the company and its shareholders to explore how they might work, and to objectively weigh the potential benefits and issues that each might present."
Renault and Nissan are willing to pay as much as $3bn for a 20% stake in GM. A three-way tie-up would create an alliance producing 15m vehicles annually. By combining manufacturing facilities, the trio could produce huge savings in parts, components and labour.
Mr Kerkorian, a Las Vegas financier who once controlled the MGM entertainment empire, wants the boss of Renault and Nissan, Carlos Ghosn, to be given a boardroom role at GM. Mr Ghosn is nicknamed "le cost killer" and is credited with turning Nissan around.
GM's shares were up 2% following yesterday's announcement. A meeting between Mr Wagoner and Mr Ghosn is likely to take place in Detroit next week.
Use the feedback form below to submit your comments.
Use the form below to email this article to your friends.
- Struggling General Motors Hit By $4.8bn Loss
- 'Tough Medicine' As General Motors Reveals Plans to Cut 30,000 Jobs
- The Blast of Atomic Automobiles
- Blocks of GM’s Stock Sold
- Internet Becomes GM’s Channel For Red Carpet Event
- HUMMER Screams 'Look at Me'
- 9-7X: The Swedish Saab
- Pontiac Solstice: Edmunds.com’s Most Significant Vehicle of the Year
- ‘Generation X’ Autos, Unleashed By Future Designers
- All New Autos For African Market
- Saturn Vue Green Line Ready For 2007
- Are You Buying A Stolen Vehicle?
- When Your Steering Becomes Loose
- What to Do When the "Check Engine" Light Goes On
- GM: A Family of Brands
- Three Perspectives on Lean
- Dealing with Auto Dealers – Seven Safeguards
- How Thailand 4x4 top exporter became so
- If Gas Is Petrol, Hood Is Bonnet - What Is Breakdown Cover?
- The History Of The RAC