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GM and Chrysler merger imminent

Coalface: America's automotive industry appears set to change for good.

GM and Chrysler to merge within two weeks as Toyota lines up for Mazda, say reports

21 Oct 2008

GENERAL Motors and Chrysler are this week pursuing their unlikely merger in the United States, with the USA Today newspaper reporting that they want to complete an agreement before the November 4 presidential election.

The newspaper reported that GM is seeking government financial assistance to complete the deal, citing a source who has been briefed on the talks.

Observers say that a merged entity would still have massive problems and would require as many as 50,000 retrenchments, but would be so big that the government could not allow it to ultimately fail.

80 center imageLeft to right: Chrysler chief executive Tom LaSorda, chairman of Cerberus Capital John Snow and Daimler chief executive Dieter Zetsche.

With two weeks to complete the merger agreement, talks are continuing apace, but a major sticking point appears to be the insistence by Cerberus Capital Management, which owns 81 per cent of Chrysler, that GMAC (GM’s financing arm) is part of the deal.

Cerberus already owns 51 per cent of GMAC and reportedly wants to swap its Chrysler shares for the remaining 49 per cent, but the GM board is resisting.

Meanwhile, Ford is also seeking to raise working capital and has reportedly held talks with two Japanese companies for the sale of its controlling interest in Mazda. One of the companies is said to be Denso, which is owned by Toyota.

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