GM to form alliance with Renault and Nissan?

UPDATE #7 The alliance between Renault SA and Nissan Motor Co. has created a new model for cooperation that's ideal for adding partners, said a Nissan executive closely involved in the original deal.

"It's a business model that we believe we can reproduce," said Dominique Thormann, a former Renault executive who's now Nissan North America's senior vice president of administration and finance.

"It appears to us that it can accommodate at least another partner," he said. "If not, we would not be in this discussion."

09/06/06 Renault SA and Nissan Motor Co. have begun hiring banks to advise them on talks with General Motors Corp. over a possible alliance, Bloomberg reported.

Renault will most likely hire two banks and Nissan will hire separately one or two as well, Carlos Ghosn, who is chief executive of both companies, said at Nissan model presentation near Paris today. He reiterated that talks were going well.

“When you have something that works, why not expand it," Ghosn told Bloomberg the presentation. “In these types of discussions it’s normal to be supported by a certain number of advisers."

07/06/06 While a high-level team at General Motors Corp. races to study a potential GM-Renault-Nissan alliance, questions are being raised about the viability of the proposed three-way partnership.

GM's board will meet Friday to consider a plan by billionaire investor Kirk Kerkorian to link GM with Renault SA of France and Japan's Nissan Motor Co. — whose boards already have approved entering formal talks with GM.

GM's preparations are also geared toward a pivotal meeting, first reported by The Detroit News, July 14 between GM Chairman Rick Wagoner and Carlos Ghosn, CEO of Renault and Nissan.

As GM Chief Financial Officer Fritz Henderson and the automaker's investment banks rush to critique the idea before GM's board meeting, the wisdom of a trilateral deal is being questioned in the United States, France and Japan.

Several Wall Street analysts have already raised doubts about tying GM to Renault-Nissan.

"We do not think a Renault-Nissan-GM combination has fundamental long-term merit, but this does not mean it will not happen," said Ronald Tadross of Bank of America.

In France, a top official of the government — which represents the state's 15 percent stake in Renault — was quoted by news agencies as urging caution before tying Renault-Nissan to struggling GM, which lost $10.6 billion in 2005. More at Detroit News

07/05/06 The boards of directors of Nissan Motor Co. of Japan and France's Renault SA on Monday approved holding "exploratory discussions" with General Motors Corp. on forming a global alliance, putting pressure on GM's board to respond to the proposal.

Friday, GM's largest single shareholder, Kirk Kerkorian, dropped a bombshell when he urged GM's board to form a committee to consider joining the Nissan-Renault alliance to cut costs and boost GM's share price. The proposal, which GM said Friday it would consider, could drastically reshape GM and the global auto industry.

Nissan and Renault, both led by CEO Carlos Ghosn, issued similar statements Monday in support of talks with GM. GM's board of directors has a regularly scheduled telephone meeting Friday, said a GM official who asked not to be named.

07/04/06 This Detroit News article outlines the intriguing story of how major shareholder Kirk Kerkorian has forced GM to consider joining the Renault-Nissan alliance. It also goes on to say that automotive superstar Carlos Ghosn, chief executive of Renault SA of France and Nissan Motor Co. of Japan, may eventually take over the reigns at GM.

He may be the only guy who can break the albatross called the UAW, that hangs around the neck of GM. How bad is the UAW? – see related article.

07/03/06 Renault SA, which owns 44% of Nissan Motor Co., is to hold a board meeting today to discuss whether to expand the alliance to include General Motors Corp., the French finance minister said.

Kirk Kerkorian, GM's biggest individual shareholder through his Tracinda Corp. investment company, sent a letter to GM CEO Rick Wagoner on Friday saying he'd discussed a tie-up with Carlos Ghosn, CEO of Renault and Nissan, and that the companies are open to an alliance. Those companies may be willing to buy 20% of the Detroit-based automaker, a person familiar with the talks said.

"I spoke with Carlos Ghosn, who wanted to say he was open to anything in terms of expanding the alliance," Finance Minister Thierry Breton said on Europe1 radio Sunday. "I nevertheless said that, as the overseer of financial markets, which is my role as finance minister, that I would look to ensure governance was clearly respected and a position not be taken before the board has come to a decision." More at Detroit Free Press

[Editor's Note: This could be the best thing that ever happened to GM given their current state of affairs and given how good Carlos Ghosn is. This alliance will create an automotive superpower and send chills down the spine of many a competing automotive company's CEO.]

06/30/06 In a move that could reshape General Motors Corp., the automaker’s largest single shareholder has urged the company to consider joining the alliance between France’s Renault S.A. and Japan’s Nissan Motor Co. Ltd.

Billionaire investor Kirk Kerkorian wrote in a letter to GM Chief Executive Rick Wagoner that Renault and Nissan are receptive to aligning with GM, and purchasing a “significant minority interest".

“We believe that participating in a global partnership-alliance with Renault and Nissan could enable General Motors to realize substantial synergies and cost savings and thereby greatly benefit the company and enhance shareholder value," Kerkorian said in the letter, which was released in a federal securities filing on Friday.

The letter is the first indication that a global alliance or merger between top automakers could be underway, the most significant since Germany’s Daimler-Benz acquired Chrysler Corp. in 1998.

Kerkorian recently discussed the proposed three-way alliance with Nissan Chairman Carlos Ghosn, according to a second letter Kerkorian sent to Ghosn. Kerkorian said to Ghosn that he believes that “such a global alliance has the potential to materially strengthen the competitive position of all three companies in the increasingly challenging worldwide automotive industry, with the attendant benefits accruing to each company and its employees and shareholders."

GM shares surged $1.16 or 4.2% to $28.60 in early trade on the New York Stock Exchange.

J.P. Morgan analyst Himanshu Patel said in a note to investors that if the partnership went through, he doubted it would change GM’s “current structural labor cost issues with the UAW. But he added that the companies could collaborate in North America on cars and trucks, and enhance each other’s strengths. Detroit Free Press

06/30/06 Kirk Kerkorian's Tracinda Corp. asked General Motors Corp.'s Chief Executive Officer Rick Wagoner to explore a three-way partnership with Nissan Motor Co. and Renault SA. Tracinda, which holds 56 million GM shares, said in a letter to Wagoner today that the partnership would “strengthen the competitive positions of all three companies.''

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