A top shareholder in General Motors Corp. said Friday that automakers Renault SA and Nissan Motor Co. are interested in purchasing a significant stake in GM and including the Detroit automaker in their alliance.
Billionaire investor Kirk Kerkorian’s company, Tracinda Corp., told GM Chairman and Chief executive Rick Wagoner in a letter that Renault and Nissan are receptive to the idea of including General Motors in their partnership and purchasing “a significant minority interest” in the automaker.
Tracinda, a large minority shareholder in GM, said the existing French-Japanese partnership has created “tremendous engineering, manufacturing and marketing synergies, resulting in substantial benefits and cost savings to both Renault and Nissan.”
Shares of GM rose sharply on the New York Stock Exchange after the news.
Tracinda urged GM’s board to form a committee to “immediately and fully explore this opportunity together with management,” as it feels the alliance could help GM “realize substantial synergies and cost savings and thereby greatly benefit the company and enhance shareholder value.”
GM, in a statement, said the Tracinda request “will be taken under advisement” by its board of directors. The automaker said it has not received any offers or proposals from Renault/Nissan about an alliance. GM said it would have no further comment.
GM has been engaged in an extensive turnaround plan in North America amid declining profits, high labor costs and growing competition from Asian automakers. The automaker announced plans last year to close 12 plants by 2008 and earlier this week announced that 35,000 hourly workers had agreed to retire early or accept a buyout offer.
Analysts offered a mixed assessment of whether an alliance would benefit the companies.
JP Morgan analyst Himanshu Patel said in a note to investors that it offered the potential for positive developments in purchasing, product development and in the growing China market.
“If GM management were to agree to such a partnership, we would view this as a major potential long-term positive for GM shareholders,” Patel wrote.
But auto analyst Robert Barry of Goldman Sachs & Co. said he saw “little logic” in an alliance, noting that Renault has recently embarked on its own restructuring plan and Nissan has made strides on its own in North America, seizing market share from the Big Three.
“We do not see the upside for Nissan from collaborating with struggling GM, certainly not in a manner that would require taking a GM stake,” Barry wrote.
Tracinda owns 9.9 percent of GM’s common stock and is GM’s third-largest shareholder. Kerkorian has pressured GM to take aggressive steps to restore profitability and his top aide, Jerome York, was elected to GM’s board earlier this year.
The letter also indicates that Tracinda has reached out to Renault Chairman Louis Schweitzer and Nissan Chairman Carlos Ghosn to alert them to its contact with General Motors.
In a separate letter advising Schweitzer and Ghosn of the GM correspondence, Tracinda noted that “as we recently discussed with Mr. Ghosn, Tracinda believes that General Motors, Renault and Nissan should explore a three-company, partnership-based alliance.”
Officials with Renault and Nissan declined comment.
Renault owns a 44.4 percent stake in Nissan, which in turn owns a 15 percent stake in Renault. Nissan was on the brink of bankruptcy when Ghosn was dispatched by Renault to lead the Japanese company in 1999. The Brazilian-born Ghosn engineered a cost-cutting and morale-boosting campaign that revived the automaker.