Nissan-Renault, GM Chiefs Meet Amid Reports Of Trouble In Merger Talks

Sept. 27, 2006
The chief executives of Renault-Nissan and General Motors met in Paris on Sept. 27 and vowed to continue their talks on a global alliance despite reports that the negotiations were in trouble. The groups will continue their feasibility study of a merger ...

The chief executives of Renault-Nissan and General Motors met in Paris on Sept. 27 and vowed to continue their talks on a global alliance despite reports that the negotiations were in trouble. The groups will continue their feasibility study of a merger until October 15 as planned, said Carlos Ghosn, the chief executive of French car group Renault and Japanese manufacturer Nissan.

Renault owns 44.4% of Nissan, which in turn owns 15% of its French partner. Together, they have sales of over 5.7 million vehicles a year with more than 9.6% of the global market. They are already strong in European and Asian markets and it makes sense for them to seek a U.S. partner that would let them create a challenger to Japan's Toyota, which is on track to overtake GM as the world's top carmaker in terms of output.

Ghosn first met Wagoner on July 14 to discuss a possible alliance between the three groups. After the meeting the companies announced a 90-day period to study a deal which is set to end October 15.

Press reports in the U.S. have however said that the talks have run into trouble. The Wall Street Journal reported that GM would ask Renault-Nissan for the payment of several billion dollars, an "equalizing contribution", to recognize the value the U.S. company believes it will bring to the partnership.

First proposed in June by GM's largest private shareholder, Kirk Kerkorian, the alliance was hailed by the market as a way to save the company. But there has been speculation that Wagoner is not interested in the deal and is merely going through the motions. A spokesman for GM however said that was not the case.

Many analysts have ruled the alliance out, saying it was more likely the talks would result in a small, narrowly focused collaboration such as that which GM and Ford have to develop six-speed transmissions or that GM, DaimlerChrysler and BMW use to develop hybrids.

Copyright Agence France-Presse, 2006

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