Report: GM Alliance Nixed

Shares of General Motors Corp. dropped Wednesday after The Wall Street Journal reported that the company terminated talks with Nissan Motor Co. and Renault SA about joining their alliance.

Citing a person familiar with the talks, the newspaper reported on its Web site that GM Chairman and Chief Executive Rick Wagoner and Renault-Nissan CEO Carlos Ghosn decided to end the talks in a phone conversation Wednesday morning.

GM spokesman Brian Akre declined to comment on the report. A Renault spokesman also declined to comment.

The report comes ahead of an Oct. 15 deadline that the two sides had set for evaluating the proposal and a week after Wagoner and Ghosn met face to face in Paris. Afterward, GM officials voiced skepticism about the proposed linkup, saying Renault-Nissan stands to benefit more than GM.

The idea to join the alliance has been promoted by billionaire investor Kirk Kerkorian, who owns a 9.9 percent stake in GM. After Wagoner's meeting with Ghosn, Kerkorian turned up the heat by announcing he might increase his stake in the company. He also called for an evaluation of the alliance proposals by independent advisers.

GM's board met all day Tuesday, but made no statement about the alliance talks or Kerkorian's proposal.

The Journal report cited another person familiar with the talks as saying that the talks failed because of a GM demand that Nissan-Renault pay a premium if it bought 20 percent of GM's stock as part of the alliance.