Would deal help or hinder GM?

[spindrifter]

July 7, 2006

BY JOE GUY COLLIER and MICHAEL ELLIS
FREE PRESS BUSINESS WRITERS

As General Motors Corp. directors discuss a possible alliance with Renault SA and Nissan Motor Co. today, industry experts say a move to join Renault-Nissan could sidetrack GM's turnaround plan and add more layers to a company already criticized for being bureaucratic.

The three-way alliance would create a vast global network with resources unmatched in the auto industry. But it also could create a complicated structure, creating more headaches than benefits.

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The Renault and Nissan boards, in separate meetings Monday, gave Ghosn clearance to begin discussions with GM. Both companies are prepared to buy 10% of GM's shares.

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At this point, GM, Nissan and Renault are considering an alliance, not a full merger, so it's even more difficult to figure out how they could achieve those shared advantages, he (Van Conway, a senior managing director in the Birmingham office of Conway MacKenzie & Dunleavy) said.

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http://www.freep.com/apps/pbcs.dll/article?AID=2006607070344

[Fenris]

1. The behemoth would get bigger.

Whether that's good or bad is up to the individual. Personally, I think the company's vastness is more of a hinderance to its turn around than an aid. The inclusion of Renault and Nissan would further convolute matters. Serious changes need to be made internally at GM. I don't think involving two foreign automakers would do much to help.

[European Socialist]

2. Kind of like the alliance between Sears and K-Mart--What's the point?

[spindrifter]

3. Article says it might be a way to

get Ghosn...he would be the big turn-around prize. But it also talks about how the deal may just be an MBA pipe dream.

[billbuckhead]

5. I would be bad for workers but good for investors

The first obvious thing for Renault-Nissan to do if they take over would be to get rid of Pontiac, Buick, GMC and probably Saturn. They could have a North American and Chinese lineup of Chevy-Nissan-Infiniti-Cadillac-Hummer.

[ReadTomPaine]

4. Kerkorian is looking for a stock price boost, this isn't good long term.

There's nothing or little to be gained for either side here other than the immediate benefit of a stock boost for the Wall Street crowd. Carlos Ghosn isn't a bad auto executive, but he's not the second coming so many paint him to be, he's made plenty of mistakes at Nissan.

Kerkorian is famous for big deals where he is the only winner. Just look up the infamous MGM deal he did with Ted Turner as an example.

The only people who will profit from a GM/Nissan merger (as it would be at least a merger, if it happens) will be Kerkor and his inner circle at Tracinda.