Chrysler expresses interest in rekindling merger talks with General Motors in a bid to save both companies from collapse.
Chrysler reignites GM talks
Troubled US automaker Chrysler hopes to reboot merger talks with General Motors as both companies grapple with imminent collapse, hoping for a federal government rescue, the Wall Street Journal reported today. The hope to restart talks could be a bid to show the administration of George W Bush, currently considering a $14bn rescue plan for the industry, "that it wants to co-operate in restructuring the industry," said the daily.
A merger could also "offer the firm a way to protect its stakes in two distressed auto-finance companies," said the Journal. Citing people familiar with the discussions, the newspaper said Chrysler's owner, Cerberus Capital Management LP, "is eager to make concessions in order to arrange a combination of Chrysler's finance arm with that of GM". A way for Cerberus to make concessions "could be to give away some of its principals' stakes in Chrysler as part of a broader restructuring," according to the report.
It is unclear what effect restarted talks could have on the political considerations for a rescue package. Yesterday Chrysler said it was temporarily halting its manufacturing for at least a month, beginning tomorrow, in response to the credit crisis and ongoing debate on a rescue for the sector. Chrysler has 14 assembly plants, 10 power train plants, four stamping operations and five manufacturing affiliations outside of North America.
GM last week announced it was leaving 30 per cent of its North American production idle. The Detroit Big Three, GM, Ford and Chrysler, have repeatedly warned that without a package of loans, millions of jobs could be lost, which they say would have devastating effects for the nation's already stumbling economy. *AFP