Thursday, July 06, 2006

Renault, Nissan: We'll welcome GM overtures

Tuesday, July 04, 2006
Renault, Nissan: We'll welcome GM overtures
Automakers' boards give blessings for Ghosn to conduct 'exploratory' discussions on venture.
Christine Tierney  and Bill Vlasic / The Detroit News

The boards of Renault SA and Nissan Motor Co. gave Carlos Ghosn the green light to explore a three-way alliance with General Motors Corp., but left the next move up to the U.S. automaker.

"The board of directors approved the position proposed by Carlos Ghosn: Exploratory discussions with General Motors, concerning a potential alliance, could start if General Motors Corp. makes the proposal," French automaker Renault said in a statement after the board meeting in Paris on Monday.

Renault owns 44 percent of Nissan, and Ghosn is chief executive of both car companies.

On Friday, Kirk Kerkorian -- who owns 9.9 percent of GM through his Tracinda Corp. -- revealed he had been in touch with Ghosn and urged GM to consider joining the Renault-Nissan alliance.

GM's stock rallied 9 percent Friday but slipped Monday as investors questioned the benefits of such a megadeal.

Renault and Nissan shares hardly budged. "The market thinks the pluses are equal to the minuses," said Gaetan Toulemonde, Paris-based analyst at Deutsche Bank.

"No one sees how Renault and Nissan can sort out GM's problems in the United States."

On the other hand, the terms floated so far do not appear to pose a major risk to Renault or Nissan. Sources close to the situation say they might each acquire 10 percent of GM for a combined investment of $3 billion.

Nissan's board also gave Ghosn its consent Monday to pursue negotiations "if General Motors Corp. supports and endorses the proposal made by its shareholders," the Tokyo-based automaker said in a statement.

The wording of the two companies' statements underscored their assertions since Friday that their approach was not hostile.

The statements conveyed none of the urgency apparent in the letters that Tracinda sent Friday to GM and to Renault-Nissan.

Kerkorian is a restive investor in GM, as he was previously at Chrysler Corp. and then DaimlerChrysler AG, but GM executives still were taken aback by Tracinda's disclosures Friday.

Renault officials would not speculate on what Ghosn knew, but analysts said it was unclear whether he was aware of the timing.

In both letters, Tracinda said it was urging GM to "immediately" explore joining the Renault-Nissan alliance formed in 1999.

"We hoped that Nissan and Renault would act promptly and with clarity so that GM management would know the depth of their interest," said Terry Christensen, an attorney and spokesman for Kerkorian.

GM shares finished 38 cents lower Monday at $29.41 on the New York Stock Exchange. Renault and Nissan shares finished up less than 1 percent in Paris and Tokyo Monday.

You can reach Christine Tierney at (313) 222-1463 or

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