General Motors Corp's board has decided to explore an alliance with Renault SA and Nissan Motor Co, bowing to pressure from dissident billionaire shareholder Kirk Kerkorian, who has chafed over the pace of the turnaround plan at the world's biggest automaker.
Chairman and chief executive Rick Wagoner will lead the talks, which stem from a proposal by Kerkorian.
In a teleconference meeting held on Friday, the board authorized the company's management to consider the proposal and "weigh the potential benefits of such an alliance in order to assist the board in its decision making," board member George Fisher said in a statement.
"General Motors has a lot of experience with different types of alliances, and some have provided significant benefits to GM's competitive position and financial strength," Wagoner said in a statement. "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. Given the complexity of any potential relationship, it has to be carefully considered on its merits before coming to any conclusion."
Nissan and Renault issued statements saying that they look forward to starting the talks soon.
Legal experts and analysts said the GM board had no other option but to study Kerkorian's proposal. Without such action, the board likely would have faced shareholder lawsuits, they said.
Wagoner said that when the idea of joining with Renault of France and Nissan of Japan first was suggested, he contacted Carlos Ghosn, chief executive of both companies, and the two agreed to meet. The meeting could take place as soon as July 14, when Ghosn reportedly will be in the Detroit area.
"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," Wagoner said.
Kerkorian's company, Tracinda Corp, issued a statement saying that it is pleased with the board's action.
"We believe that the upcoming meeting between Mr. Wagoner and Mr. Ghosn is a good first step, but a full and objective evaluation of this unique opportunity will require establishment of a board committee that receives independent financial and legal advice," the statement said.
Fisher, retired chairman and CEO of Eastman Kodak Co, said the board will monitor the talks and make sure they serve the best interest of all GM stockholders.
The Nissan and Renault boards each endorsed the discussions after Tracinda disclosed the potential alliance in filings with the Securities and Exchange Commission June 30.
Analysts and dealers who know Wagoner have said that he likely is against the proposal, instead preferring to let his turnaround plan play out. Last week, the company announced that 35,000 hourly workers will retire or take buyouts, helping it to reduce production capacity and close 12 plants by 2008. It has received health care concessions from the United Auto Workers union and is coming close to resolving cost problems at Delphi Corp, GM's largest parts supplier that the automaker spun off into a separate company in 1999.
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