UPDATE 1-DEALTALK-GM/Chrysler mull job-sparing deal for US aid

lunes 27 de octubre de 2008 03:15 CET
 

(Adds names of banks representing GM, Cerberus)

By Kevin Krolicki

DETROIT Oct 26 (Reuters) - General Motors Corp (GM.N: Cotización) and Chrysler LLC's 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, people familiar with the talks said on Sunday.

A merger under these terms would give control to GM but leave Chrysler's owner, Cerberus Capital Management [CBS.UL], with stake of less than 10 percent 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 a painful and so-far failed restructuring effort since 2005. The board has withheld judgment on the proposed merger so far.

A deal brokered with the support of U.S. lawmakers would leave GM executives walking a delicate balance in managing a bigger but still deeply troubled automaker.

Costs and production would have to be slashed. But the merged company would also have to show it represented a less painful alternative for American workers and suppliers than the failure of one or both of the struggling auto giants.   Continuación...