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Nissan OKs Talks About Hook Up With GM

Discussion would require GM to back proposal that it join alliance of Nissan and Renault.

TOKYO (AP) - Nissan Motor Co. on Monday approved opening talks with General Motors Corp. over a possible alliance, the Japanese automaker said.

Nissan's board of directors met earlier in the day and decided the company ''should proceed with exploratory discussions concerning a potential alliance with General Motors,'' Nissan said in a statement.

The talks will be conditional on GM endorsing a proposal by its major shareholder, Tracinda Corp., that GM join the alliance between Nissan and its partner, Renault SA, the statement said.

The announcement came ahead of a Renault board meeting where executives were expected to discuss the purchase of a significant stake in General Motors with Nissan.

Local media reports have said Renault and Nissan could buy up to 20 percent of outstanding shares in GM. Details of the possible investment plan surfaced after billionaire investor and major GM shareholder Kirk Kerkorian proposed on Friday that the troubled American carmaker join the Nissan-Renault alliance.

French Finance Minister Thierry Breton said on Europe-1 radio that he had met several times over the weekend with the CEO of Renault and Nissan, Carlos Ghosn, to talk about the possible deal.

If it materializes, the deal would create a huge auto alliance with annual output exceeding 15 million vehicles and commanding nearly one-quarter of the global market share, according to Kyodo. It remains unclear how much the investment would cost.

GM has been engaged in an extensive turnaround plan in North America amid declining profits, high labor costs and growing competition from Asian automakers. The automaker announced plans last year to close 12 plants by 2008 and said 35,000 hourly workers had agreed to retire early or accept a buyout offer.

Nissan shares finished marginally higher Monday, adding 7 yen ($0.06), or 0.56 percent, to 1,257 yen ($10.99) on the Tokyo Stock Exchange.

Renault owns a 44.4 percent stake in Nissan, which in turn owns a 15 percent stake in Renault.