Friday, October 17, 2008
GM, Chrysler Merger Talks Heat Up!
GM, Chrysler Merger Talks Heat Up: Report
General Motors (GM Quote - Cramer on GM - Stock Picks) and Chrysler LLC are accelerating merger discussions amid strong support from potential lenders that are eager to see a deal done, the Wall Street Journal reports.
GM is set to soon report dismal third-quarter earnings and is scrambling to find new sources of funding, the newspaper reports, citing people familiar with the matter. That's spurring the automaker to complete the deal as soon as the end of October.
Major banks, such as JPMorgan Chase(JPM Quote - Cramer on JPM - Stock Picks), that have long been lenders to both companies also are eager to do a deal to help reduce exposure to the auto industry.
Cerberus Capital, which owns Chrysler, is looking to have a stake in a combined GM-Chrysler, the Journal reports.
At this point, GM and Chrysler are far from having a firm deal in hand. Certain members of GM's board continue to give the deal a cool reception. It is also unclear whether a key element of the talks -- swapping Chrysler for GM's 49% stake in GMAC LLC -- will happen, the Journal reports.
However, GM's management team is working on a potential takeover of Chrysler, and top-level executives remain bullish on the prospects of the combined company.
A spokesman for GM declined to comment, as did spokeswomen from Chrysler and Cerberus, the newspaper reported.
Reuters, meanwhile, reports Cerberus is in talks to sell all or part of Chrysler to France's Renault. Renault has expressed an interest in Chrysler that has spanned possibilities from an alliance to an acquisition of Jeep, widely considered to be Chrysler's most valuable brand, according to sources.
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