msnbc.com news services
updated 11:53 p.m. CT, Wed., Dec. 17, 2008
General Motors and Chrysler have reopened merger talks, with Chrysler's private owners signaling a willingness to give away part of its stake in the automaker, The Wall Street Journal reported Thursday, citing people familiar with the discussions.

With cash running low at both companies, Chrysler majority owner Cerberus Capital Management took the initiative to restart discussions that sputtered just weeks ago, the paper said.

The renewal of the talks could be a way for Cerberus to show Washington, which is weighing a $14 billion rescue package for the auto industry, that it wants to cooperate in restructuring the industry, the paper said, citing people familiar with the buyout firmfs thinking. An auto-industry bailout was rejected by the Senate last week, and now the Bush administration has suggested it will extend a helping hand to prevent the industry from collapsing.

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But the White House has not specified how or when it might help.

Merger talks between GM and Chrysler were suspended in early November after GM warned that it could run out of cash in early 2009 and announced it had to refocus its attention on its "immediate liquidity challenges." GM lobbied heavily for the congressional bailout package, with CEO Rick Wagoner making two trips to Capitol Hill along with his industry colleagues from Chrysler and Ford.

A merger with GM could offer Cerberus a way to protect its stakes in two distressed auto-finance companies, GMAC LLC and Chrysler Financial, which are crucial to the survival of the automakers, according to the Journal.

In the revived merger talks, Cerberus is considering giving away an ownership stake in Chrysler, possibly for distribution by a future government auto czar to the United Auto Workers or GM, the Journal said.

The equity stake is considered virtually worthless but could be seen as a contribution to the restructuring of the troubled industry.

GM and Chrysler could not be immediately reached for comment by Reuters.

In a sign of just how deeply sales have slumped, Chrysler said Wednesday it is closing all 30 of its manufacturing plants for a month starting Friday, extending the traditional two-week holiday shutdown period.

Chrysler said tighter credit markets are keeping would-be buyers away from its showrooms and preventing dealers from closing sales.

With the U.S. sales slump expected to continue into January, traditionally one of the slowest sales months of the year, the company has little revenue coming in and must pay suppliers $7 billion every 45 days.

 

Per CNBC this morning "Gm denies any pending talks off Chrysler gm merger" Have to see how this plays out, someone (media) doesn't have the story straight.

 

I would have to say that this would be a really hard thing to do right now, merge companies. I don't see it happening when both companies are saying that they don't really have any money to run the company that they have now. Putting these two companies together still puts them in the same boat, if not worse. Still a company with no money to run it, or if they merge, a bigger company with no money to run it.

 

For some reason I have the feeling that's it more for show (for the Government) than in really trying to merge the two. Could be wrong, I guess time will tell.....

 

Supposedly lack of brand consolidation is partly why GM is in the mess they are. How does taking on yet more brands solve that problem?

 

I'm with Axel-you cant polish a turd and a GM/Chrysler merger will just be a bigger one. Both companies need to retool, cut down on redundant products and get rid of the s!

 

Two wrongs don't make a right. Buy a Ford instead...

 

Own a Ford. I would rather go back to Dodge. 2010 Mustang is a disappointment to me. My 07 Mustang will be the last Ford I own, and probably the only Ford I'll own. Ok, so I had an 06 also, but that doesn't count. Got the Stang because of the retro look, now I have a better looking option.

 

Maybe on the outside, but that is debatable. On the inside there is absolutely no comparison between the two. Have ya seen the new interior of the 2010 Mustang? It is very impressive and certainly much easier on the eyes than Challenger's. But truth be told, I am a little disappointed overall in the 2010 Mustang. Should have come with more power out of the box. From what I understand there is a supercharger kit available thru Ford Racing that is warrantied (if installed by a Ford dealer) that will get it to 400 HP, but that sucks. I would have preferred 400 NATURALLY ASPIRATED horsepower.

 

I agree with you 100% Albeeno. I'm not saying that I don't like the outside of the Mustang, I love it, I just like the Challenger better. R/T speeds are comparable, which is disappointing giving it has more power, but that's all I really want. That 0-60 time for when I get on that highway. The interior really diappointed me, but they made it a little better before they brought it out. Not what I wanted it, but a little better. I'm still looking into getting that Ram steering wheel in it, or an aftermarket, but we'll see about that with the cost and such.

Yes, the interior of the Mustang is better, in my opinion, then the Challenger, but I like the looks of the outside better. And, as you said, the 2010 Mustang is a disappointment overall. I did expect more when it came to the engine, at least what Dodge has been doing with the Hemi, but only 15? Ouch. And, as you said, 400 N/A is more impressive, and cheaper, then 400 from a S/C. If I had the money then I may think about it, but unfortunately I don't. At least I can say that I owned a good looking car, two of them, Challenger and Mustang, though the Challenger is questionnable now with the auto industry woes. Who knows if I will see my car.