UPDATE 2-GM, Chrysler merger on hold as aid hopes fade-sources
(Adds detail on Nissan-Renault, GM share price movement, comments from Obama, McCain campaigns)
By Jui Chakravorty Das and Kevin Krolicki
NEW YORK/DETROIT Oct 31 (Reuters) - A deal to merge General Motors Corp (GM.N: Cotización) and Chrysler LLC has hit an impasse after the Bush administration ruled out funding for it, three people with direct knowledge of the talks said.
This puts any merger of the struggling automakers on hold until after the U.S. presidential election, the sources said.
The development adds a new element of uncertainty for the embattled U.S. auto industry as Detroit's political allies warn the sector faces a deepening financial crisis that threatens tens of thousands of jobs.
It also opens the door for Cerberus Capital Management, which owns Chrysler, to restart talks with the Nissan-Renault alliance run by Carlos Ghosn. The private equity firm has seen that option as a backstop to an outright acquisition of Chrysler by GM, one of the sources said.
The sources declined to be named as they were not authorized to discuss the private talks. GM and Cerberus declined comment.
This week, Ghosn said he sees any deals among automakers involving a cash element as unlikely unless the cash came from outside, such as from the government.
Discussions with Nissan-Renault (7201.T: Cotización) (RENA.PA: Cotización) would likely start with consideration of an expanded product-based tie-up building on an existing deal between Chrysler and Nissan, the source familiar with those talks said. Continuación...