[LSC9901]

News reports are saying that GM's largest single investor is suggesting that GM partners up with Nissan and Renault. What do you think ?

http://www.bloomberg.com/apps/news?p...pA0&refer=home

[Quality88]

Originally Posted by LSC9901

News reports are saying that GM's largest single investor is suggesting that GM partners up with Nissan and Renault. What do you think ?

Not a GM fan...but, that usually means things are pretty bad, or going to get bad.

[Souporscotty]

All I can say is, Renault is probably THEE worst automobile ever manufactured on the face of GOD'S green earth.

[Bob Tanner]

Originally Posted by Souporscotty

All I can say is, Renault is probably THEE worst automobile ever manufactured on the face of GOD'S green earth.

I once was the owner of a brand new Renault Alliance (1985). I won't be global enough to say "worst," but I will say it was in the top five.

[Nevadastars]

Originally Posted by Souporscotty

All I can say is, Renault is probably THEE worst automobile ever manufactured on the face of GOD'S green earth.

I beg to differ. That honor goes to the Yugo.

[Bob Tanner]

Originally Posted by Nevadastars

I beg to differ. That honor goes to the Yugo.

Ever driven a East German Tabi?

[LSC9901]

Would a big deal save GM?






An alliance between GM and Renault/Nissan may be relatively unlikely. But investor euphoria should provide a floor under GM stock for now.


By Robert Walberg

You have to give Kirk Kerkorian credit -- he is doing what he can to maximize shareholder value at General Motors (GM, news, msgs). Tracinda Corp., Kerkorian’s investment company, is now advising GM management to “immediately and fully explore” a potential partnership with Nissan Motor (NSANY, news, msgs) and Renault in which those companies would buy a material minority interest in GM.
The market responded by bidding GM stock up nearly 8%. GM broke above the $30 level for the first time since October of last year. Year-to-date, the auto maker’s stock is now up by an eye-opening 49%.
The question is why Nissan and Renault would want to partner with the struggling GM. According to the letter sent by Tracinda, the Renault/Nissan partnership is interested in possibly forming a three-way alliance. However, it’s difficult to imagine why they would have an interest in GM given its ongoing sales and financial troubles.

A new job for Ghosn?

Supposedly the combination would result in additional synergies and cost savings, similar to those enjoyed by the Renault/Nissan partnership when it first formed several years ago. The combination would also create a geographical powerhouse. Finally, the deal could speed up the replacement of Mr. Wagoner as GM’s CEO. Mr. Ghosn, the CEO of both Renault and Nissan is generally considered the top turnaround artist in the auto business today. It’s not difficult to imagine a scenario in which he gradually -- or better yet, quickly -- would emerge as the new head of GM as well.These are the reasons such a deal makes sense. Nevertheless, it’s hard to build a compelling case for Renault and Nissan wanting to add GM to the mix. As noted in this column just the other day, GM is faced with a number of long-term difficulties. Not least of which are declining sales and a bloated product mix.
Maybe Mr. Ghosn thinks he can do for a struggling GM what he did for Nissan -- a company that has enjoyed a remarkable turnaround over the past five years. But the corporate cultures are considerably different and turning around an old, bloated, stagnant company like GM would be a much bigger challenge.
GM’s miserable credit rating and deteriorating financials are additional roadblocks to any such deal. Maybe Kerkorian can convince Renault/Nissan to take the plunge. Heck, maybe the minority stake he is encouraging them to buy is his own 10% of the company. Now that would be a smooth exit.
But the chances of such a deal coming together are relatively small. Look for today’s euphoria to subside a bit and for GM’s stock to level off. Even so, the mere hope of such a deal will keep a tight floor under the stock over the short-term. The market will also reward the stock with an unnaturally high multiple relative to earnings, based on Kerkorian's ongoing efforts to bolster shareholder value.

[Bob Tanner]

Originally Posted by LSC9901

Would a big deal save GM?

Maybe Mr. Ghosn thinks he can do for a struggling GM what he did for Nissan -- a company that has enjoyed a remarkable turnaround over the past five years. But the corporate cultures are considerably different and .

Very interesting story. The Journal ran a "what if" article on this last week.
Mt first question is: Is this a case of GM's going to do things the Ghosen (Nissan) way (The GM way sure worked well until the 80's then... flop!), or is this a precursor for a NISSAN takeover of GM? (The UAW's going to love that train of thought!)
Luckily I have no GM stock. I do strictly aggressive growth mutual funds and, as far as I know (and I keep a fairly close track) none of my money is in the auto sector.