(Adds details, background, Nissan comment)
TOKYO Oct 22 Nissan Motor Co (7201.T) is
proposing to buy about 20 percent of Chrysler and bring the
troubled U.S. automaker into the Franco-Japanese alliance with
Renault SA (RENA.PA), the Detroit News reported on Wednesday,
citing sources familiar with the situation.
The offer is now before private equity firm Cerberus
Capital Management [CBS.UL], which holds 80 percent of
Chrysler, the paper said. Citing another source close to the
talks, the paper also said Cerberus founder and chief executive
Stephen Feinberg still favours a deal with General Motors Corp
Nissan declined to confirm or deny the report.
"This is more of the same noise and we have no comment to
make on any of the recent speculations," Simon Sproule, head
spokesman at Nissan, said.
GM, looking for a lifeline to replenish is depleted
coffers, has been pushing ahead with talks to acquire Chrysler,
people briefed on the talks have told Reuters. Although it does
not report financial information, Cerberus has said Chrysler
ended June with $11.7 billion in cash. [ID:nN19473329]
The Financial Times reported earlier, however, that GM was
looking for a large investment from outside investors as a
possible alternative to a deal with Chrysler. [ID:nN21336919]
Citing unnamed sources, Detroit News said Carlos Ghosn,
chief executive of both Renault and Nissan, had sent a proposal
in recent days that included revisions to a draft agreement
prepared by Cerberus.
Since 2006, when Nissan and Renault studied a possible
three-way link-up with GM, Ghosn has held to his position that
a trans-continental alliance that includes North America would
benefit the existing one. Since forming their equity tie-up in
1999, Nissan and Renault have enjoyed billions of dollars in
cost savings every year.
Led by Executive Vice President Carlos Tavares, Nissan has
held ongoing talks with Chrysler over the past year that have
so far led to three separate projects for the mutual supply of
vehicles under original equipment manufacturing (OEM) deals.
While Renault would be part of any partnership with
Chrysler, Nissan would acquire the stake because it has cash on
hand, Detroit News said. Renault's debts have mounted,
especially after buying a 25 percent stake in Russian automaker
Avtovaz (AVAZ.MM) for more than $1 billion.
Investors, who balked at the three-way talks with GM two
years ago, are likely to react similarly this time.
"It's hard to see the benefit when the global auto market
is slowing down," Takeshi Osawa, senior fund manager at
Norinchukin Zenkyoren Asset Management said. "I'm not sure
Nissan can afford to make such a move. It's likely to be
negative on its shares."
Shares in Renault were down 4.8 percent in Paris,
underperforming the 2.7 percent fall in the CAC-40 index.
Nissan's shares ended down 9 percent in Tokyo before the
report, mirroring sharp falls in other auto stocks as the yen
(Reporting by Chang-Ran Kim; Additional reporting by Taiga
Uranaka; Editing by Bill Tarrant)