Kerkorian ditches GM share plans

Kirk Kerkorian is unhappy with the GM board

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.

I have grave reservations concerning the ability of the company's current business model Jerry 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 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.