GM, Renault, Nissan cut off alliance talks
GM said Renault and Nissan would have benefited more than it would have.
DETROIT (AP) -- General Motors, Renault and Nissan said Wednesday that they have cut off discussions about forming a three-continent automotive alliance after GM sought compensation for its participation.
"The parties mutually recognized that significant aggregate synergies might result from the alliance," the three companies said in a joint statement. "However the parties did not agree on either the total amount of aggregate synergies or the distribution of those benefits."
GM's board decided unanimously Tuesday that the proposed alliance was not in the best interest of the company's shareholders, GM Chairman and Chief Executive Rick Wagoner said at a news conference Wednesday.
General Motors Corp. had proposed that France's Renault SA and Japan's Nissan Motor Co., which are already joined in an alliance, provide compensation as part of a potential link-up, the companies said.
The reason for that was twofold, GM spokesman Brian Akre said. First of all, GM wanted payment because it believed it would have benefited from the alliance far less than Renault and Nissan would have, Akre said.
In addition, an alliance could have prevented GM from teaming up with other companies, and the automaker felt it should be compensated for giving up those potential opportunities, he said.
GM also argued that if Renault-Nissan acquired a significant stake in the U.S. automaker, GM would be prevented from joining any other alliances.
But Renault and Nissan believe compensation would be "contrary to the spirit of any successful alliance," the companies said in a prepared statement ahead of the Wagoner news conference.
GM shares fell 9 cents to close at 33.32 on the New York Stock Exchange.
GM is the world's largest automaker but has been losing market share at home to Asian rivals, who enjoy a reputation among some consumers for making more fuel-efficient cars. It is also at a disadvantage to Asian automakers because of large accumulated pension and health costs.
It lost more than 10.6 billion last year but has said a restructuring program that includes massive job cuts and plant closings is already starting to pay off.
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 Renault-Nissan CEO Carlos Ghosn met face to face in Paris. Afterward, GM officials voiced skepticism about the proposed linkup, saying Renault-Nissan stands to benefit more than GM.
The idea to join the alliance has been promoted by billionaire investor Kirk Kerkorian, who owns a 9.9 percent stake in GM. After Wagoner's meeting with Ghosn, Kerkorian turned up the heat by announcing he might increase his stake in the company. He also called for an evaluation of the alliance proposals by independent advisers.