JUNE 30, 2006

An interesting development

Kirk Kerkorian, the celebrated US investor who holds 9.9% of General Motors, is urging the world's largest car manufacturer to go into partnership with Renault and Nissan in order to create a truly global car company. At the moment General Motors is big in the US but struggling elsewhere while Renault is big elsewhere but has no presence at all in the United States.

According to documents, Kerkorian's company Tracinda understands that "Renault and Nissan are receptive to the concept of including General Motors in their partnership-alliance and purchasing from General Motors a significant minority interest in the company". The letter also says that Tracinda believes that a deal with Renault "could enable GM to realize substantial synergies and cost savings and thereby greatly benefit the company and enhance shareholder value".

A deal with GM would be an earthquake in the automotive world.