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GM, Renault-Nissan end talks on proposed alliance after months of speculation

GM, Renault-Nissan end talks on proposed alliance after months of speculation

General Motors has called off discussions with Renault and Nissan on creating a grand automaking alliance that proponents argued would have created significant savings but critics said could have been a dangerous distraction from GM's turnaround.
General Motors Corp., Renault SA and Nissan Motor Co. discussed the idea for nearly three months. But they said Wednesday that talks ended after Renault and Nissan declined to pay a premium for reaping what GM said would have been a disproportionate share of the benefits.
France's Renault and Japan's Nissan also wanted to acquire a significant stake in GM - an idea the U.S. company was not enthusiastic about, particularly without payment of some kind of premium. GM also said the structure that Renault-Nissan advocated would have kept it from forming joint ventures with other companies.
Renault-Nissan said compensation would go against "the spirit of any successful alliance."
The companies have not given details about the size of the proposed premium or the stake Renault-Nissan wanted.
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 US$0.09 cents Wednesday to close at US$33.32 on the New York Stock Exchange.
The world's largest automaker lost more than US$10.6 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.
"We felt that the complexities of working with three companies could slow us down," Wagoner said. He stressed that the board voted unanimously to end the talks.
Wagoner also said the board sought outside financial advice on the proposal, but he declined to say whether he believed that satisfied a Kerkorian demand for an independent analysis.
Nissan's stock jumped on the news, climbing 3.47 percent to close at 1,369 yen (US$11.65) yesterday.