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Foreigners Mull GM Options

TSC Staff

Automakers Nissan and Renault, whose alliance helped save Nissan from bankruptcy in 2000, apparently want to offer the same medicine to General Motors(GM Quote).

The boards of Japan's Nissan and France's Renault on Monday authorized exploratory discussions about the prospects of bringing GM into their alliance, following up statements made Friday by GM shareholder Kirk Kerkorian.

Kerkorian said in a federal filing Friday that Renault and Nissan, which are both led by French automotive executive Carlos Ghosn, would entertain letting GM into their partnership and possibly buy a stake in the Detroit firm. GM shares rose about 10% on the news as investors welcomed the possibility of new cash and even new management at the company, which lost $10.6 billion in 2005.

Bank of America upgraded GM's stock to neutral on Monday, saying a transaction with Renault and Nissan is slightly far fetched but could support the shares over the near term. The bank raised its price target on the shares, which closed at $29.79 Friday, to $30 from $15.

A Bloomberg story Monday said Kerkorian has lost confidence in current GM CEO Rick Wagoner and wants GM to pursue a deal with Nissan and Renault or come up with something else to revive its fortunes. GM's board met on Friday to discuss the proposals by Renault and Nissan.

GM finished Monday's abbreviated session down 38 cents, or 1.3%, at $29.41. The stock is up more than 50% this year.