Sun, Jul 02, 2006 - Page 11 News List

Renault, Nissan eye GM stake

POSSIBLE ALLIANCE A billionaire mogul informed the struggling US auto giant by letter that the two firms have expressed interest in buying a minority stake in the firm

AP , WASHINGTON

Kirk Kerkorian, the billionaire mogul and major shareholder in General Motors Corp, said that automakers Renault SA and Nissan Motor Co are interested in purchasing a significant stake in GM and including the Detroit automaker in their alliance.

Kerkorian's investment company, Tracinda Corp, told GM chairman and CEO Rick Wagoner in a letter that Renault and Nissan are receptive to the idea of including General Motors in their partnership and purchasing "a significant minority interest" in the automaker.

Shares of GM soared US$2.45, or 8.9 percent, to close at US$29.89 on Friday on the New York Stock Exchange.

Tracinda, which owns 9.9 percent of GM's common stock and is GM's third-largest shareholder, said the existing French-Japanese partnership has created "tremendous engineering, manufacturing and marketing synergies, resulting in substantial benefits and cost savings to both Renault and Nissan."

In a separate letter to Nissan Chairman Carlos Ghosn and Renault Chairman Louis Schweitzer, Tracinda said: "Tracinda believes that such a global alliance has the potential to materially strengthen the competitive positions of all three companies in the increasingly challenging worldwide automotive industry."

Tracinda urged GM's board to form a committee to "immediately and fully explore this opportunity together with management," as it feels the alliance could help GM "realize substantial synergies and cost savings and thereby greatly benefit the company and enhance shareholder value."

GM, in a statement, said the Tracinda request "will be taken under advisement" by its board of directors. The automaker said it has not received any offers or proposals from Renault/Nissan about an alliance. GM said it would have no further comment.

A GM official confirmed reports that the GM board met on Friday. The official, who spoke on condition of anonymity, was not authorized to discuss the meeting.

Nissan said in a statement that Ghosn had been approached by Kerkorian and his top aide Jerome York and other Tracinda officials "to assess the merits of GM joining the Renault Nissan Alliance."

"At this point, it is necessary that GM Board and top management fully support this project in order to start the study of this opportunity after agreement of Renault and Nissan boards," Nissan said.

Nissan said its alliance with Renault was an "open partnership" and "under the right circumstances and with the appropriate partners, the Alliance could be expanded further."

Renault owns a 44.4 percent stake in Nissan, which in turn owns a 15 percent stake in Renault. Nissan was on the brink of bankruptcy when Ghosn was dispatched by Renault to lead the Japanese company in 1999. Brazilian-born Ghosn engineered a cost-cutting and morale-boosting campaign that revived the automaker.

GM has been engaged in an extensive turnaround plan in North America amid declining profit, high labor costs and growing competition from Asian automakers. The automaker announced plans last year to close 12 plants by 2008.

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