Following rumors Wednesday afternoon, General Motors, Renault and Nissan issued a joint statement saying they had agreed to terminate discussions regarding a proposed alliance among the three companies. “The parties mutually recognized that significant aggregate synergies might result from the alliance,” the companies said in a joint statement. “However the parties did not agree on either the total amount of aggregate synergies or the distribution of those benefits.”

“Based on its conclusions, GM had proposed that Renault-Nissan provide compensation as part of a potential alliance and for potentially precluding GM from entering other alliance opportunities if Renault-Nissan had made a significant investment in GM,” the statement said.

“Renault and Nissan consider that the principle of compensation is contrary to the spirit of any successful alliance.” Transcript of a speech by GM CEO Rick Wagoner after the jump…

Transcript

• A couple of hours ago, we issued a joint press release with Nissan and Renault, stating that we have agreed to terminate discussions on the three-way alliance.
• This follows a unanimous decision by our Board of Directors that the structure of the proposed alliance would not be in the best interests of GM and its stockholders.
• I wanted to take a few minutes to provide a little more perspective.

• Out of respect for the confidentiality agreement with Renault-Nissan and the confidentiality of our Board deliberation, I suspect I won’t be able to supply all the details that you will be asking about. But I felt it would be helpful to review some headlines that will help you to understand our decision process.
• First of all, I want to thank the Renault-Nissan leadership and work team members, as well as Fritz Henderson and the other GM’ers involved in this study.
• Everybody worked very hard, many times at very early and very late hours of the day.
• There was a great spirit of cooperation, and attitudes were very constructive.
• The teams worked hard to agree on a process to evaluate synergies and to get the best data.
• And there was consensus on what specific initiatives could yield highest value, and those projects were jointly evaluated.
• In almost all cases, the teams were in agreement over the evaluation of the potential synergies, and very importantly, the relative distribution of those synergies among the three parties.
• We differed in one area on the valuation of the synergies…but even in that area, we agreed on the relative distribution of the synergies.
• As it turned out, we all agreed that the synergy levels were significantly in favor of Renault and Nissan.
• On Monday evening and Tuesday, we had the opportunity to review the synergy study in detail with the GM board, as well as other key aspects of the Renault-Nissan alliance model.
• In addition to the synergy projects, under the Renault-Nissan alliance model they would acquire a substantial block of GM common stock at market price, along with preferential rights that could preclude GM from entering into other automotive alliances.
• Renault-Nissan made it clear they would not pay any market premium, nor compensate GM to balance the disproportionate impact of expected synergies, nor for potentially precluding other alliances.
• They offered us the right to acquire stock in their companies, as well.
• In the end, following a comprehensive review and discussion, the GM Board determined that the alliance structure proposed by Renault-Nissan was not in the best interests of our stockholders.
• This vote was unanimous and followed a comprehensive process that included advice from outside financial advisors. The Board rejected the proposed alliance taking into consideration its impact on stockholder value, especially in three areas:
• No premium to recognize Renault-Nissan’s disproportionate share of the synergies;
• No premium for the purchase of a significant minority stake in our company;
• And the fact that the proposed structure effectively would have blocked GM from pursuing other alliances, without adequate compensation.
• In addition, our Board did not feel that using GM’s available funding to invest in Renault or Nissan shares was appropriate at this time.
• And finally, it’s fair to say that the proposed broad-based alliance model would represent a significant change in the way we are running our business.
• It would have potentially been a distraction to our current turnaround efforts. For example, it unfortunately doesn’t help in key areas like our huge U.S. legacy cost competitive disadvantage, and it could impede our fast-moving efforts to evolve to a global management system.
• We felt that the complexities of working with three companies could, in fact, slow us down.
• And, there was also concern about the skewed distribution of the synergies potentially providing significant advantage to an important competitor.
• I want to reiterate that the GM Board has been involved in this process from the very beginning, and reached its conclusion based on the analysis and recommendation of GM management, and with advice on the proposal from outside financial advisors, Goldman, Sachs and Morgan Stanley.
• We did advise Renault-Nissan that we were very open to the idea of further exploring, and eventually implementing, individual synergy projects that are mutually beneficial. At this point, our understanding is that we will not be proceeding on this basis.

• At GM, we remain focused on our North American turnaround, where we are making real progress…progress that is well ahead of what the skeptics thought possible.
• Over the past 12 months, we have implemented a number of big moves… in health care, manufacturing capacity, hourly attrition, salaried and executive headcount and benefits, asset sales and liquidity enhancements, acceleration of key product launches, introduction of the industry’s best warranty, completely revamping our marketing strategy… and these actions are already yielding very significant and needed improvement in our results.
• And we’re focused today on several other key matters, as well… the successful resolution of Delphi and closing the GMAC transaction in the fourth quarter; on the acceleration of the GM Europe turnaround, which is in full gear; and continued profitable growth, especially in Asia and South America, which are going very well.
• More broadly, we’re creating a company that is leaner and faster… one that has a passion to create the greatest cars and trucks in the world, with the best design, engineering, and technology… one that fully leverages its tremendous global scope and scale.

• In closing, we remain open to working together with other OEMs on projects that add value to our business and our stockholders.
• While this study with Renault-Nissan did not yield such value, we appreciate their effort and professionalism in comprehensively and thoughtfully addressing the opportunity.

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