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Old 09-18-2006, 01:48 PM   #1
KILLER74Z28
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General Motors, Ford have discussed possible merger or alliance

News bulletin
Report: General Motors, Ford have discussed possible merger or alliance

September 18, 2006

High-level executives at General Motors Corp. and Ford Motor Co. have discussed possibly forming a merger or alliance, Automotive News reported today.

The negotiations began in July after Nissan Motor Co. Ltd. and Renault SA CEO Carlos Ghosn broached the possibility of an alliance among Renault, Nissan and GM, according to several people familiar with the talks, Automotive News reported.

It is not clear who launched the talks. One person said GM CEO Rick Wagoner contacted Ford Motor the day after Ghosn disclosed his plan. A second person disputed that.

In August, GM CFO Fritz Henderson discussed the proposed alliance with Ford
CFO Don Leclair, said a person familiar with the talks.

But it is not at all clear whether the negotiations will bear fruit. As of now, the two
companies are not holding talks, and one person says there is a slim chance that anything will come of it.

GM spokesman Tony Cervone declined to comment on the report.

"We regularly talk to a number of people in the industry regarding business
opportunities of mutual interest," Cervone told Automotive News on Friday. "As a matter of course, we don’t comment on any of those because in many cases, they simply don’t lead to anything."

Ford spokesman Oscar Suris also declined to comment.

“It would surprise me if there were a coming-together on the grand level,” said David Cole, head of the Center for Automotive Research in Ann Arbor.

“I don’t see it from a business standpoint,” said analyst Charles Fleetham of
Project Innovations in Farmington Hills. “They have the same high health costs,
high union costs, ineffective white collar work force that they want to get rid of.”
Somewhere down the line, though, the number of companies that make cars is going to shrink, Cole said.

“There’s going to be more consolidation. I think it’s going to accelerate,” Cole said.
Ford and GM very well could start more joint efforts similar to their current work to develop a six-speed automatic transmission, Cole said, adding, that contacts between automakers “go on all the time at the senior level.”


Talk of alliances involving GM came after GM shareholder Kirk Kerkorian, who owns a 9.9% stake in the company, called for GM, Renault and Nissan to pursue an alliance.

Carlos Ghosn, the chief executive of Renault and Nissan, has said the benefits from an alliance would be similar to the gains from the Renault-Nissan alliance, which have included cost savings from joint purchases of auto parts.

Ford earlier declined to comment on an August Wall Street Journal report that then-Chief Executive Bill Ford approached Ghosn about a Ford alliance with Renault and Nissan.


Sources: PR Newswire news release and Associated Press
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