Friday, July 14, 2006

GM will consider alliance with Renault, Nissan

GM will consider alliance with Renault, Nissan
A dissident shareholder made the proposal, and some think his goal is to oust the current CEO of struggling GM.
From Wire Services

DETROIT General Motors Corp.'s board has decided to explore an alliance with Renault SA and Nissan Motor Co.

In a teleconference meeting Friday, the board authorized the company's management to consider the alliance proposed by dissident billionaire shareholder Kirk Kerkorian, who has chafed over the pace of GM's turnaround plan.

The proposal: Renault and Nissan each would take a 10 percent stake in GM, in a deal worth $3 billion.

The principals: GM, the world's largest automaker, employs 327,000 people around the world and about 3,000 in the Dayton area. The French government owns 15 percent of Renault. Nissan is Japan's third-largest automaker.

Behind the talks: This is a high-stakes chess match over the future of GM. It began with a proposal by Kerkorian, who owns 9.9 percent of the company. Some observers believe his end game is moving Chairman and Chief Executive Rick Wagoner out and putting Carlos Ghosn, chief executive of Renault and Nissan, at the controls of GM. The automaker, in the midst of a historic downsizing of its U.S. operations, lost a whopping $10.6 billion last year.

Next step: A meeting between Wagoner and Ghosn could take place as soon as Friday, when Ghosn reportedly will be in the Detroit area.

Union reaction: "We're seeing a further erosion of good jobs in the country should this come about," UAW President Ron Gettelfinger said Friday, before the board's decision. "The entire complexion of the auto industry in the future will be determined by this."

Copyright ©2006 Cox Ohio Publishing, Dayton, Ohio, USA. All rights reserved.


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