Oct. 4 (Bloomberg) -- General Motors Corp. ended talks aimed at teaming with Carlos Ghosn's Renault SA and Nissan Motor Co. because of a dispute over GM's demand to be compensated for taking part in an alliance.

GM wanted payment to make up for the benefits the French and Japanese automakers would have received, the companies said today. GM Chief Executive Officer Rick Wagoner also said a Renault-Nissan partnership would have prevented his company from pursuing ties with other automakers.

The decision, reached unanimously by GM's 12-member board, signals the directors' support for Wagoner's strategy to recover from last year's $10.6 billion loss. It also rebuffs billionaire Kirk Kerkorian, GM's fourth-biggest investor, who spurred Wagoner three months ago to study a link with Ghosn.

``This seems to be a vote of confidence from the board that GM's restructuring plan is on track and that they are interested in pursuing it full time,'' said Efraim Levy, equity analyst for Standard & Poor's in New York.

GM's board includes Jerome York, an adviser to Kerkorian's investment company, Tracinda Corp. Tracinda had been pushing for an independent group to evaluate the alliance and ensure an ``objective'' review of the plan.

``We regret that the board did not obtain its own independent evaluation,'' Tracinda spokeswoman Carrie Bloom said. ``General Motors' participation in a global alliance with Renault and Nissan would have enabled GM to realize substantial synergies and cost savings.''

Focus on Ford

The end of talks with GM may shift Renault-Nissan's attention to Ford Motor Co. Ghosn said last week he wants a North American partner for his companies. Ford, seeking to overcome a $1.44 billion first-half loss, has expressed an interest in alliances with other automakers.

``I said from the beginning that an expansion of the alliance to a North American partner makes sense,'' Ghosn said at a conference in Paris last week. He wouldn't comment on the possibility of an alliance with Ford at that time.

Ford's shares had their biggest gain in three weeks, rising 33 cents, or 4 percent, to $8.56 at 4:19 p.m. in New York Stock Exchange composite trading.

Last week, GM, Nissan and Renault agreed to continue their three-month study until Oct. 15. Today, they said that while they recognized an alliance would have yielded savings, the automakers ``could not agree on either the total amount of aggregate synergies or the distribution of those synergies.''

Long-Term Benefits

``The benefit for GM in an alliance would have been long- term: sharing of suppliers and designs, for example,'' said Fitch Ratings credit analyst Mark Oline. ``It's likely they determined that this brought little benefit in the short term and rejected it for that.'' He said the news wouldn't affect GM's B rating, which is five levels below investment grade.

GM shares plunged as much as 5.2 percent on initial reports of the end of talks. They fell 9 cents, or less than half a percent, to $33.32 at 4:19 p.m. in New York Stock Exchange composite trading, and have gained 72 percent this year.

The two sides had been at an impasse on potential savings from combining GM's $86 billion in annual purchasing costs with Renault and Nissan's $59 billion tab, two people familiar with the discussions said this week.

GM had figured an alliance would cut its purchasing costs by $1 billion to $2 billion; the Renault estimate was much higher, a person familiar with the talks said.

No Premium for GM

``It didn't seem like a balanced deal for GM,'' said company spokesman Brian Akre. ``Nissan-Renault didn't want to offer the premium for what would have been a disproportionate share'' of the benefit in an alliance.

Simon Sproule, Nissan's vice president of communications, said Nissan and Renault discussed taking a ``substantial'' equity stake in GM. ``It would have needed to be a sizeable stake, in the same spirit as the Renault-Nissan alliance,'' Sproule said, without elaborating.

Renault owns 44 percent of Nissan and Nissan owns 15 percent of Renault.

Wagoner, 53, has said he wants to focus on his own strategy for reviving Detroit-based GM after finding ways to cut $9 billion in costs by the end of this year.

In a Sept. 28 U.S. regulatory filing, Kerkorian said Tracinda may increase its GM stake by 12 million shares to show his support for the alliance idea. An expanded stake would boost Kerkorian's holdings to 12 percent from 9.9 percent and make him GM's No. 2 shareholder.

Tracinda's Stake

``Tracinda's potentially increased ownership of GM's stock is more important to the stock then the actual alliance,'' Banc of America Equity Research analyst Ron Tadross said in a report today, maintaining his neutral rating on GM shares.

``We could have envisioned a scenario where Tracinda may have gotten frustrated with a slow pace of an alliance,'' he said.

Akre said investment banks Goldman Sachs Group Inc. and Morgan Stanley helped GM to reach its decision on the alliance.

Executives from the Renault-Nissan team and Ford have held talks in the past month on exploring a possible tie-up, two people with knowledge of that situation said two weeks ago. Chairman William Clay Ford Jr. initiated the discussions when he called Ghosn in July.

Ford Motor, of Dearborn, Michigan, is ``looking at all manner of things'' regarding potential alliances, Chief Financial Officer Don Leclair said in an interview in Paris last week.

Nissan's Sproule said Nissan and Renault ``remain committed to the belief that a third partner to the alliance, a North American partner, would be a benefit.'' He added the Japanese and French automakers' success wasn't dependent on any tie-up.

Willing Partner

Ford spokesman Tom Hoyt wouldn't discuss the potential for a Renault-Nissan alliance.

From the beginning, Ghosn has said he would pursue a partnership only if GM was willing. Wagoner said last week that GM doesn't need an alliance to survive. Ghosn told a French television station yesterday that a decision to proceed would hinge on the level of savings the companies might generate.

Kerkorian has argued that GM has a ``strong opportunity'' in pairing with Ghosn, who led once-struggling Nissan to six straight years of record profits.

GM's 8.375 note due in July 2033 rose 1.625 cents to 87.75 cents on the dollar, yielding 9.7 percent, according to Trace, the NASD's bond-price reporting service. It's the bond's highest price since August 2005.

To contact the reporters on this story: Jeff Green in Southfield, Michigan, at jgreen16@bloomberg.net; Greg Bensinger in New York at gbensinger1@bloomberg.net

Last Updated: October 4, 2006 18:31 EDT