GM-Renault/Nissan alliance talks called off

After nearly three months of talks, General Motors Corp. announced that it had discarded a scheme to forge a broad, global alliance with Renault and Nissan after the other two automakers declined to pay a premium for reaping what GM said would have been a disproportionate share of the benefits.
GM said Wednesday that France's Renault SA and Japan's Nissan Motor Co., which are already linked in an alliance, refused to pay a premium to GM for that imbalance.
Renault-Nissan also wanted to acquire a significant stake in GM _ an idea GM was not enthusiastic about, particularly without payment of some kind of premium. Finally, the structure that Renault-Nissan advocated would have kept GM from forming joint ventures with other companies, the U.S. company said.
Renault-Nissan said compensation would go against "the spirit of any successful alliance."
The idea to join the alliance was backed by billionaire investor Kirk Kerkorian, who owns a 9.9 percent stake in GM. It fueled speculation that Kerkorian was dissatisfied with Chairman and Chief Executive Rick Wagoner and hoped to replace him with Renault-Nissan CEO Carlos Ghosn, who is widely admired for leading a turnaround at the Japanese company. Wall Street responded positively to the idea of a linkup, but many industry observers said a complicated alliance could distract GM from its own turnaround efforts.
GM shares fell 9 cents Wednesday to close at $33.32 on the New York Stock Exchange.
The world's largest automaker lost more than $10.6 billion (euro8.4 billion) last year and has been steadily losing market share to Asian rivals. But last quarter, if not for restructuring charges, the company would have logged a hefty profit _ proof, management says, that the turnaround is working.
Wagoner said the board was concerned the alliance would weigh upon the automaker's turnaround efforts.
"We felt that the complexities of working with three companies could slow us down," he said.
The announcement came ahead of an Oct. 15 deadline that the two sides had set for evaluating the proposal and a week after Wagoner and Ghosn met face to face in Paris.
After the meeting, GM officials expressed some skepticism about the proposed alliance. Kerkorian then turned up the heat by announcing he might increase his stake in the company and calling for an evaluation of the alliance idea by independent advisers.
Kerkorian's Tracinda Corp. said Wednesday that it was disappointed.
"We believe that General Motors' participation in a global alliance with Renault and Nissan would have enabled GM to realize substantial synergies and cost savings," Tracinda spokeswoman Carrie Bloom said in a statement. "We regret that the board did not obtain its own independent evaluation of the alliance."
But Wagoner stressed that the board voted unanimously to end the talks. Tracinda is represented on the board by Jerome York.
Wagoner also said the board sought outside financial advice on the proposal, but he declined to say whether he believed that satisfied Kerkorian's demand for an independent analysis.
In their joint statement, the three companies said they all agreed that there were would be "significant aggregate synergies."
"However the parties did not agree on either the total amount of aggregate synergies or the distribution of those benefits," the statement said.
Wagoner said all three companies agreed that the benefits were weighted in favor of Renault-Nissan, and particularly in favor of Nissan.
Nissan spokesman Fred Standish questioned whether the companies had the same understanding of the proposal.
"The idea of the compensation and the rhetoric that went behind that flies in face of the spirit of an alliance," he said.
David Cole, chairman of the Ann Arbor-based Center for Automotive Research, said an alliance was not as attractive to GM now as it might have been a few years ago. That's because the company has been standardizing its processes and components across the globe and is just starting to reap the benefits.
"The last thing GM was going to do was, in a sense, give a competitor that economy of scale," he said.
Wagoner declined to term the board's decision a personal victory or a referendum on his leadership.
"We just keep it simple," he said. "We're just, everyday, making the decisions that are right for the business."
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Updated : 2021-01-28 16:13 GMT+08:00