http://www.nasdaq.com//aspxcontent/newsstory.aspx?selected=GM&symbol=gm&textpath=2006 0630%5CACQDJON200606301223DOWJONESDJONLINE000782%2 Ehtm&cdtime=06%2F30%2F2006+12%3A23PM
2nd UPDATE:Tracinda Pushes GM Link Up With Renault-Nissan
(Updates with analyst comments, background, comment from GM and stock price.)
NEW YORK -(Dow Jones)- Billionaire investor Kirk Kerkorian's Tracinda Corp. is urging General Motors Corp. (GM) to join the alliance between Renault SA ( 13190.FR) and Nissan Motor Co. (NSANY) and believes those companies are interested in a deal.
An agreement would establish a link between GM and two companies that have already been through difficult turnarounds and would also bring the struggling U.S. auto maker into the orbit of Carlos Ghosn, the chief executive of both Renault and Nissan who has a track record of fixing broken auto operations.
Ghosn previously has expressed interest in adding another partner to the Renault-Nissan alliance. In separate letters sent to Ghosn and GM Chief Executive Rick Wagoner Friday, Tracinda said it recently discussed the matter with Ghosn and said Renault and Nissan are "receptive" to including GM and to buying a "significant minority interest" in the automaker.
GM said its board would consider Tracinda's proposal. The company's shares jumped in early trading Friday, reaching a nine-month high of $30.56 before easing late in the morning. Shares were recently up $1.16, or 4.2%, to $28.60.
"If GM management were to agree to such a partnership, we view this as a major long-term positive for GM shareholders," JPMorgan analysts Himanshu Patel and Ranjit Unnithan said in a research note.
Tracinda's letters, included in a filing U.S. Securities and Exchange Commission Friday, said an alliance with Renault and Nissan has the potential to strengthen all three companies. Tracinda told Wagoner the deal could "enable General Motors to realize substantial synergies and cost savings and thereby greatly benefit the Company and enhance shareholder value."
Tracinda holds a 9.9% stake in GM and has been pushing for changes. The automaker, which posted an $10.6 billion loss last year, is engaged in a major cost-cutting and turn-around effort.
Kerkorian consultant Jerry York - who has advocated cutting the dividend, cutting management pay and eliminating some vehicle name plates - has had a seat at GM's Board of Directors table since February.
Kerkorian's moves at GM echo steps he took nearly a decade ago, when he acquired a major stake in Chrysler Corp., pushed for change from management and helped steer the company into the arms of Daimler-Benz to form DaimlerChrysler AG (DCX).
Despite Tracinda's statement suggesting Renault/Nissan interest in the idea, some analysts expressed doubt Friday.
"We have reason to believe that this idea is currently very conceptual, contradicts comments Renault's CEO has made regarding having more brands ( amongst other things) and does not seem necessary for Nissan," Banc of America analyst Ronald Tadross said in a research note Friday.
Burnham Securities analyst David Healy suggested there's no chance GM would join the partnership and said Friday's stock gain was likely the result of short-covering.
JPMorgan said it doubted Nissan and Renault would build a minority interest into a full acquisition of GM, given Ghosn's "historical aversion" to such moves.
French car maker Renault holds a 44% stake in Japanese auto maker Nissan, and Ghosn is chief executive of the alliance. Ghosn recently ruled out a full merger with Nissan as he unveiled a much-need restructuring plan for France's Renault.
Ghosn is widely credited for his swiftly engineered turnaround at Nissan's helm, which he took in 1999. Nissan posted a 9.5% profit margin for the quarter ended Dec. 31, 2005, one of the highest in the industry.
Though Ghosn has resisted directly addressing what he believes the right course of action is for GM, the executive has called more innovative designs and lower incentives across the auto industry. In January, York urged GM CEO Wagoner to follow Ghosn's example as he works to turn around GM.
Tracinda told Wagoner in the letter released Friday that the Renault-Nissan partnership-alliance has created tremendous engineering, manufacturing and marketing synergies, resulting in substantial benefits and cost savings to both companies.
-By Simona Covel, Dow Jones Newswires; 201 938 2371;
simona.covel@dowjones.com
(Bhattiprolu Murti in Washington, Steve McGrath in London, Terry Kosdrosky in Detroit and Jon Kamp in Chicago contributed to the story.)
(END) Dow Jones Newswires 06-30-061222ET Copyright (c) 2006 Dow Jones & Company, Inc.
06-30-2006, 05:52 PM
Xterra-in-laws???
Posting Rules
Linear Mode
