GM Held Talks With Cerberus About A Chrysler Merger
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According to various reports, General Motors (NYSE: GM) was recently in talks with Chrysler owner Cerberus Capital about acquiring the struggling automaker, but those talks may be on the back burner as the credit crisis has GM fighting for its own survival.
One plan being discussed, according to the Wall Street Journal, is for Cerberus to swap Chrysler's automotive operations for GM's 49% stake in GMAC. Cerberus owns the other 51% of GMAC.
People close to GM said a Chrysler deal could provide up to $10 billion in cost savings to the companies.
Shares of GM were under severe pressure this week, falling to levels not seen since 1950, as questions mount, not only about the company's own access to capital, but the ability of willing auto buyers to get loans. When customers had access to loans they weren't lining up to buy cars - so with customers having limited access to available financing the next 12 months could be brutal. GM has been claiming it has enough cash into 2009, but it is unlikely that their computations were based on the current market environment and questions remain.
If the markets stabilize, talks between GM and Chrysler could be renewed.
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