AFSCME 3357-HOF'S BLOG

BREAKING NEWS: GM - NISSAN - RENAULT MERGER DEAD

Eleven days before the scheduled end of the management review process, executives from General Motors and Renault/Nissan are expected to make a joint announcement that talks for the merger have been called off. While it's not official at this point, reports from multiple sources suggest that the chances of the merger happening are about the same as the chance that Bobby Brown will be named Father of the Year. Face it, it's about as dead as Generalissimo Francisco Franco. It's as dead as an ex-parrot. It's snuffed it.

You'll read a lot of speculation about what killed the deal. There are many reasons. You'll hear talk that the parties couldn't agree on how to distribute the savings from combined parts distribution. You'll hear talk that Renault didn't want to pony up cash. You'll hear talk that GM's entrenched management didn't want to give up control. All of these are probably true to a point, but I think the compelling reason is that Renault didn't have enough reason to buy now when it can pick up the best parts later for a fraction of the price. Carlos Ghosn got what he wanted the most, a chance to look under the hood and see what was down there. Ghosn knows what the parts are worth now, and you can bet that He will be first in line to pick out the juicy bits when GM files Chapter 11.

Was all this merger speculation a waste of time, probably yes for GM, almost certainly no for Renault. Carlos Ghosn knew from the get go that the chance to look was worth the cost of looking.