Sunday, October 19, 2008
Chrysler News-Chrysler-GM merger could happen by month’s end
Chrysler NewsChrysler-GM merger could happen by month’s end, Chrysler breakup still possible
Rumors of a Chrysler-General Motors merger surfaced just days ago, but a new report indicates Cerberus Capital Management – Chrysler’s majority stake holder – is ramping up efforts to sell the Detroit-area automaker, whether in parts or as a whole entity.
And a deal with GM could be hammered out sooner than first thought. According to The Wall Street Journal, GM wants to finalize a deal with Cerberus by the end of the month. However, the two sides are still a long way from signing the dotted line, with plenty of details left to be sorted out.
But there is plenty of support for the deal from inside GM as well as from outside business interests. According to Automotive News, GM estimates a Chrysler merger could result in a $10 billion savings and also give GM access to Chrysler $11 billion in cash. Several banks have also been supportive of the merger, including J.P. Morgan & Chase Co. – a major banker for both automakers.
Despite the support for a Chrysler-GM merger, Cerberus is still considering breaking up Chrysler for individual sale. If Cerberus were to go down that path, Renault would join GM in the buying picture. It remains unclear exactly what assets Renault would target in that situation, but it is reported that GM would take over Chrysler’s minivan business and its Mexico truck operations.
A breakup would also likely see Cerberus selling off Mopar – Chrysler’s parts division — and Chrysler Financial.
With so many scenarios and details flying around, it seems like there is plenty left to sort out before a ‘Sold’ sign can be hung on Chrysler’s front door. But with sales dwindling by the day, the urgency of the merger has been increased by all parties involved.
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