New York Times and now CNBC is reporting that management behind GM and Chrysler are in talks of merging. Right now it's a 50-50 possibility. Monday, we may know more. Below is a link and excerpt from the article in question. You can bet your ass, this is making it into my Manufacturing Monday series!
DETROIT — General Motors is in preliminary talks about a possible merger with Chrysler, a deal that could drastically remake the landscape of the auto industry by reducing the Big Three of Detroit automakers to the Big Two. The talks between G.M. and Cerberus Capital Management, the private equity firm that owns Chrysler, began more than a month ago, and the negotiations are not certain to produce a deal. Two people close to the process said the chances of a merger were “50-50” as of Friday and would most likely still take weeks to work out. - excerpt from "G.M. and Chrysler Explore Merger", NY Times.
wow
Because Chrysler is in private equity so that to me implies
it's more of joining Chrysler in a bust...
Who are these Cerberus people for I fear very bad things from a private equity firm, although they have not scuttled Chrysler yet.
I sure hope you cover this in depth for this is one wild turn of events!
Why?
IF GM is having financial problems, and they are now that the rest of their markets are drying up, what good will Chrysler do them?
Two combined auto-finance companies meet ...
... and come away as an auto company and a finance company.
If the deal goes through, that's what it would be ... GM swaps the balance of GMAC that it holds to Cerberus, who already holds the controlling interest, and gains Dodge-Chrysler in return.
Other than the Jeep name, market share in the Mexican market and more US Auto Workers to hold hostage for a government bail-out, I cannot imagine what GM thinks they would be getting out of it, but on the other hand, swapping one failing business for another means that they do not have to worry about finally getting their act together in the auto market only to be dragged down by GMAC.