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Kirk Kerkorian has cancelled plans to buy more General Motors shares
due to his displeasure at the firm ending alliance talks with Renault
and Nissan.
The billionaire investor, who owns 9.9% of General Motors (GM), had
been known to be strongly in favour of the tie-up.
It was also announced that Mr Kerkorian’s representative at GM, Jerry
York, had quit the carmaker’s board.
GM said the decision to end talks with Renault and Nissan had the
backing of all board members, including Mr York.
The news of Mr York’s resignation and Mr Kerkorian’s decision not to
buy any more stock saw GM’s shares lose 7% of their value on Friday.
Analysts speculated whether Mr Kerkorian, widely seen as the catalyst
behind GM’s accelerated turnaround efforts, will now choose to sell
off some or all of the 56m shares he owns.
‘Too abrupt’
His investment firm Tracinda said in a statement that it was
cancelling plans to buy extra GM shares because it was unhappy that
the carmaker had "abruptly announced the termination" of talks with
Renault and Nissan.
Tracinda said GM should not have done so before the initial deadline
and without obtaining an independent review from the board.
Mr York, a former Chrysler executive, criticised GM in his
resignation letter.
"I have grave reservations concerning the ability of the company’s
current business model to successfully compete in the marketplace
with those of the Asian producers," said Mr York.
He also attacked "an environment in the boardroom" that made it hard
to challenge GM’s management.
Back in July, GM announced that its second-quarter losses had widened
to $3.2bn (£1.7bn) from $987m in 2005.
Like fellow big <?xml:namespace prefix = st1 ns =
"urn:schemas-microsoft-com:office:smarttags " />US carmaker Ford, GM
is struggling from falling sales in its home market, where it is
handicapped by an over-reliance upon thirsty pickup trucks and SUVs.
Last Updated: Friday, 6 October 2006, 21:10 GMT 22:10 UK
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