General Motors Corporation, Chrysler Llc and Cerberus Capital Management Lp Have Held Preliminary Talks About a Merger or a Gaining of Chrysler by General Motors Which Has Been Going on for Months

General Motors Corporation, Chrysler LLC and Cerberus Capital Management LP have held preliminary talks about a merger or a gaining of Chrysler by General Motors which has been going on for months,” according to CNN reporters.

Chrysler, which is roughly 80 percent owned by Cerberus, already has a joint project with General Motors making hybrid gas-electric cars, and has discussed a full merger with General Motors. Cerberus is a company that specializes in providing both financial resources and operational expertise to help transform undervalued companies into industry leaders for long-term success and value creation. They generate over $100 billion in annual revenues from companies such as Chrysler. The Wall Street Journal reported that Cerberus, a private equity firm that also owns 51 percent of General Motors Acceptance Corporation (GMAC) Financial Services, proposed trading Chrysler's automotive operations to General Motors in exchange for General Motors's remaining 49 percent in GMAC. GMAC, primarily an auto lender, also has important mortgage lending operations that have been hit hard by the crisis in that industry.

The talks have been delayed because of the recent events in the financial markets, like the government's seizure of Fannie Mae and Freddie Mac and rescue of American International Group; the bankruptcy of Lehman Brothers and pending sale of Merrill Lynch; the first money market fund loss in more than a decade; a series of bank fire sales; and a politically charged federal bailout plan that could carry a $700 billion price tag. Negotiations could resume if markets stabilize because both General Motors and Cerberus want to sell off the assets as soon as possible.

The negotiations between 100-year-old General Motors and 83-year-old Chrysler began more than a month ago. The New York Times said its sources predict the chances of a merger being completed at "50-50." "Without referencing this specific rumor, as we've often said, General Motors...