General Motors’ convened a special board meeting today to consider an alliance with Renault-Nissan, according to Automotive News, a trade publication.
The prospect of a three-way partnership was first raised by billionaire investor Kirk Kerkorian, who owns almost 10 percent of GM. Both Renault and Nissan said they would welcome a deal with GM. Were GM to agree, both Renault and Nissan would take a 20% minority stake in the world’s largest automaker.
GM has impressed Wall Street recently with its approach to cost savings in response to its severe financial and market share losses over the last two years (for related story, see “Bullish on GM Stock? Check out the Bonds“). Ultimately, GM could further benefit from the lessons learned by Nissan from its own successful turnaround.
Kerkorian, acting through his Tracinda Corporation, asked GM’s board to appoint a committee to seriously consider the benefits of an alliance. Both Renault and Nissan share a common CEO, Carlos Ghosn, who is widely respected for his efforts at Nissan over the last six years. Ghosn, known for his willingness to bring edgier designs to Nissan, could help bring cost synergies to GM.
Although GM’s response to Kerkorian’s proposal is not yet known, the willingness of Ghosn to invest in GM is a vote of confidence in the future of the embattled automaker. Shares of GM surged over the prospect of an agreement, closing Friday at 29.95, a gain of more than 9%. Its bonds also showed substantial gains.