Auto Service World
News   October 27, 2008   by Auto Service World

GM and Chrysler look at job sharing deal to secure aid

Reuters is reporting General Motors and Chrysler owners are discussing a merger that would keep some of Chrysler’s operations intact and save jobs with the aim of securing U.S. government financial aid the high-stakes deal would require.
Such a merger would give control to GM but leave Chrysler’s owner, Cerberus Capital Management with stake of less than 10 per cent in the combined company, according to the sources who were not authorized to discuss the talks publicly.
Such a merger would shake up the U.S. industrial landscape and create an automaker with about a third of the U.S. car market by sales. But its immediate success would hinge on the willingness of the next U.S. administration to step up with billions of dollars in immediate aid.
The amount required would dwarf the $1.5 billion in loan guarantees that kept Chrysler from failure in the industry’s last government bailout almost 30 years ago, the sources said.
It would also require the backing of GM’s board, which has been steadfast in backing Chief Executive Rick Wagoner through the company’s restructuring effort since 2005. The board has withheld judgment on the proposed merger so far.
“It’s clear that there are three parties at the table. There’s GM, Cerberus and then there’s the government,” said one person briefed on the talks.
GM, Chrysler and Cerberus declined to comment since Sunday.

Print this page


Have your say:

Your email address will not be published. Required fields are marked *