Saturday, October 18, 2008
GM and Chrysler Merger Picks up steam! and Looks more likely!
DETROIT, Oct. 17 (UPI) -- Merger talks between U.S. auto makers General Motors Corp. (NYSE:GM) and Chrysler LLC are picking up speed, sources close the discussions said.
GM, the largest U.S. vehicle manufacturer, is struggling to find new funding, The Wall Street Journal reported Friday. The auto giant also expects to release a disappointing third-quarter financial report and wants a deal consummated by the end of October, sources told the Journal.
The company expects a merger to reduce operating costs by $10 billion in a deal that would also give GM access to Chrysler's $11 billion in cash reserves, the Journal said.
Lenders, like JPMorgan Chase (NYSE:JPM), are also pushing for a deal, hoping to reduce their exposure to the struggling auto industry.
On the financial side of the discussions, J.P. Morgan and Citigroup Inc. (NYSE:C) are representing Chrysler, while Morgan Stanley (NYSE:MS) and Evercore Partners (NYSE:EVR) are representing GM, the Journal reported.
Spokesmen from both automakers refused to comment on the deal, the Journal said.
But, a key element of the exchange, a swap of GM's 49 percent holdings in financial subsidiary GMAC LLC for Chrysler, remains unresolved, the Journal said.
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