A bold plan to unite General Motors and Renault that would create a $100 billion global auto giant was set to come before the board of the French carmaker late last night.
GM's most high-profile investor, billionaire Kirk Kerkorian, urged the US company last week to consider a three-way partner-ship with Renault and its partner Nissan.
Renault and Nissan chief executive Carlos Ghosn has said the board and management of GM would need to fully support the project before any study of the plan could take place.
Nissan said after its board meeting that its directors had approved exploratory talks and charged Mr Ghosn with leading the discussions.
A tie-up would put the Brazilian-born French executive of Lebanese parents at the helm of a global auto group that will be breathing down the neck of Japan's Toyota, which has a market value of some $190 billion (#103 billion).
But analysts doubted that the deal would benefit Renault, which has a controlling 44 per cent stake in Nissan, because of the risk involved just as the French company has embarked on a recovery plan drawn up by Mr Ghosn after he turned around Nissan.
Mr Ghosn expressed interest in acquiring a stake of up to 20 per cent in the world's largest carmaker at a dinner several days ago with Mr Kerkorian, it has been claimed.
Mr Kerkorian owns 9.9 per cent of GM, while analysts estimate the 20 per cent stake could cost Renault about #1.8 billion.
Renault already owns the Romanian Dacia brand and has a stake in Samsung Motors of Korea.
GM is the maker of Cadillac, Corvette, Saab, Hummer, Opel/Vauxhall and Chevrolet cars.
"We struggle to see short-to medium-term synergies for both sides," Dresdner Kleinwort credit analyst Christophe Boulanger said.
Mr Boulanger said a ten per cent GM stake would cost Renault about #902 million, which would likely trigger a potential negative outlook.
CM-CIC Securities analyst Pierre-Yves Quemener said Renault could easily finance such a stake but added the gains of a three-way tie-up for Renault were limited.
He said: "We would simply stress that the challenges could offset the advantages in a period where Renault is restructuring."
At UBS, an analyst said that while a tie-up with GM would give the alliance the much discussed "third leg", it would create problems.