GM negotiating to BUY Chrysler

[DainBramaged]

GM has been negotiating to buy Chrysler

Market turmoil may have put talks on ice.

A General Motors-Chrysler merger may be in the works, again.

The New York Times, The Wall Street Journal and other major news outlets reported late Friday that GM has been talking to Cerberus Capital Management LP to acquire struggling Chrysler LLC.

But it's not clear if the talks, which apparently began more than a month ago, are still ongoing. The turmoil in world financial markets may have delayed or derailed the negotiations.

Without citing sources, the Times reported that people close to the talks said the chances are 50-50 that the negotiations will lead to a GM-Chrysler merger. The newspaper also reported that Cerberus is also shopping Chrysler to Japan's Nissan Motor Co., and France's Renault SA.

This wouldn't be the first time GM has shown interest in Chrysler. GM was one of several companies interested in acquiring Chrysler in early 2007 when former owner Daimler AG decided to sell the automaker. GM's bid was considered a long shot at the time, however.

This also wouldn't be the first time GM has discussed a major deal with Cerberus. In 2006, Cerberus acquired a majority 51 percent stake in GMAC from GM.

And, according to the Journal report, Cerberus offered to sell Chrysler to GM in return for GM selling its remaining 49 percent stake in GMAC to Cerberus.

As is customary, GM declined to discuss the negotiations with any specificity.

GM spokesman Tony Cervone told the Times: "Without referencing this specific rumor, as we've often said GM officials routinely discuss issues of mutual interest with other automakers."

The Journal reported late Friday that the talks are suspended because of the global financial meltdown affecting stock markets and credit.

http://www.autonews.com/apps/pbcs.dll/article?AID=/20081011/ANA02/810119998/1142 (subscription only, posted in full)


SO I guess the Trailblazer SS would be replaced by the Hemi Jeep SRT, but not in my driveway.

[high density]

1. Lots of crap + massive crap = lots of massive crap

[ForrestGump]

5. Hey...behave.

At least somebody's buying Chrysler...

[Dover]

2. And GM just got a big bail out (loan) for $85 Million

Are they using it to buy Chrysler?

[DainBramaged]

3. They did not, sorry, wrong, read the bill again

[Dover]

4. Here's a good article and explanation

You're right, my figure on the 'loan' is not correct. This loan to the 'big three' is the first installment of a broader loan plan.

My question is why isn't the government funding or assisting through incentives those small upstart companies that have been ahead of the 'big 3' in development of efficient models? Why not let the
big three fail and allow new companies to crop up in their place that can offer a whole new mindset and breed of transportation? Reward the innovators and get rid of the 'old' industries and their monopolistic stranglehold so as to invest in real change?
This 'loan' just seems to support a top heavy consolidation when what we need is smaller, agile companies and overall diversification.

What has the r&d of these companies been directed toward for all these years? They make it sound like it only just occurred to them to focus on new fuels and efficiency issues in the last few years, if that. Is that possible?

Which leads to my next question: What IS the relationship between the auto and energy companies?


-------------------------------------------------------------------


A $25 Billion Lifeline for GM, Ford, and Chrysler

... The idea behind the loans is to buy time while the Detroit 3 revamp their lineups, develop new hybrids and other fuel-sippers, and convert old SUV plants into factories turning out hot cars able to compete with those from Toyota and Honda. "I think they're on the verge of really turning the page," says Stabenow. But Detroit has fallen mightily. Consumers reeling from $4 gas have fled the big trucks and SUVs that the manufacturers milked for two decades, and Detroit's smaller cars tend to rate poorly compared with competitors. The domestics' U.S. market share is now about 48 percent, a staggering fall of nearly 20 points since the start of the decade. Fitch Ratings expects GM and Ford to produce about 1.3 million fewer cars this year than in 2007. Even cheap loans will do little to help erase years of red ink. "Even if they had positive cash flow," says Mark Oline of Fitch, "it's going to take some time to make a dent in their debt load."

There's more aid coming. This year's $25 billion is just a down payment. The automakers now plan to ask the government for another $25 billion in loans next year. It's just spare change, after all.


http://www.usnews.com/blogs/flowchart/2008/09/24/a-25-billion-lifeline-for-gm-ford-and-chrysler.html

----

US Congress passes 25 bln loan guarantees to automakers
http://news.yahoo.com/s/afp/20080928/pl_afp/uscongressautocompany

[leeroysphitz]

6. "Why not let the big three fail..."

Yeah. Why not just nuke Detroit and the rest of South Eastern Michigan with everybody in it. I mean why do it the slow, painful way?

[Dover]

7. The leadership of these companies sunk Detroit years ago

by not retooling and revitalizing the industry with meaningful innovation.
That leadership would like to place the blame everywhere but on their own shoulders...
blaming competitors and 'liberals', while spending tons of money on lobbyists in
Washington to fight real change.

I don't know what the answer is for Michigan. It seems they were too dependent on one
industry for their welfare and this might be the time to diversify and retrain their
workforce for a new economy. But trying to patch a rusty old sinking ship as it goes
down is not, imo, looking after the welfare of that state.

[DainBramaged]

11. I have a question about 'innovation'

Other than the Hybrids (which account for about 2% of all cars and trucks sold) what innovation have the Japanese and Koreans done that is meaningful?? Toyota's September sales dropped 32% because of soft SUV and truck sales last month. And since their lineup (www.toyota.com) is MORE heavily skewed to trucks and SUV's than the Domestics what have they done to improve any area of the country? They build plants in the poorest and most educationally deprived areas simply for the low cost, brainwash the employees that they don't need a Union, and then do NOTHING to improve the communities they take over, other than jobs.

Tell me about innovation.

[DainBramaged]

8. Why not I just click the magic red X for gross ignorance?

that solves many problems here. You work in the industry?

[leeroysphitz]

10. Whoops. Misunderstood your post! Sorry.

[DainBramaged]

9. I'm working, I'll get back to you.

[ReadTomPaine]

12. "Cerberus offered to sell Chrysler to GM in return for GM selling its..49 percent stake in GMAC "

Interesting - I wonder if this was the 'unspecified equity stake' that was hinted at in the LBN thread. As long as Cerberus isn't interested in getting involved with GM as an automaker, I'm happy to see them divest from Chrysler. Getting the rest of GMAC is much more their style and makes sense.

Here's the LBN thread for the curious - http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x3538854

[rucky]

13. Hoping they'll become "too big to fail"?