Deal flop marks death of Saturn

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By Laurence Frost and Doron Levin BLOOMBERG NEWS

PARIS | Renault SA dropped plans to provide vehicles for General Motors Co.'s Saturn brand after talks with would-be buyer Penske Automotive Group Inc. broke down at the last minute, Chief Operating Officer Patrick Pelata said Thursday.

"We negotiated with them but we were unable to reach agreement at the end," Mr. Pelata said in an interview.

GM said Wednesday that it would close Saturn after Penske ended discussions to buy the brand, citing Renault's decision to pull out of the vehicle-supply talks. In a statement, which didn't mention Boulogne-Billancourt, France-based Renault by name, Penske blamed the proposed supplier's board for rejecting an agreement it had reached with management.

Renault Chief Executive Officer Carlos Ghosn didn't recommend approval of an agreement with Penske at Wednesday's board meeting, Mr. Pelata said after a news conference in Paris. Ending the talks "was not a board decision," he added.

"The deal probably made a lot of sense to Renault at first glance," Mike Tyndall, a London-based European autos specialist with Nomura Securities, said in a telephone interview. The proposal may have drawn objections from Nissan Motor Co., Renault's 44 percent-owned Japanese affiliate, he said.

"When they looked into the details they probably realized it would do the Renault-Nissan alliance more harm than good," Mr. Tyndall said. "They'd be using potentially cheaper versions of alliance products to compete with Nissan in its most important market."

Renault's eight-member executive committee rejected the agreement Wednesday before it went to the board, company spokeswoman Frederique Le Greves said Thursday. She declined to give any reasons for the decision.

Penske, which is based in Bloomfield Hills, Mich., said it dropped the Saturn purchase because it couldn't be sure of finding another supplier to replace Renault after 2011, when GM would have stopped producing vehicles for the brand under the terms of the draft agreement.

Penske's exit forces changes to GM's post-bankruptcy plan to shed U.S. brands, which provided for the sale of the Saturn, Hummer and Saab units and the shutdown of Pontiac. The Detroit-based automaker said in June that the Saturn sale would save 13,000 jobs and 350 dealerships.