Talks on a possible GM and Chrysler merger have been denied by GM spokesmen.
Reports of reopening merger talks betwee GM and Chrysler have been unequivocally denied by GM spokesmen Tony Cervone and Greg Martin.
In a report by the Wall Street Journal, Chrysler owner Cerberus Capital Management was willing to simply give away part ownership of the company as part of a deal. Both companies in dire need of operating capital were exploring a merger as a possible avenue towards viability.
Chrysler had announced earlier that it was shutting down for a month all 30 plants in North America to reduce their total production and slow their bleeding of cash. GM says it will need about 8 billion US dollars to make it to February without a declaration of bankruptcy.
But it's hard to see how two companies in such desperate financial condition could benefit each other in a merger. They're both in the same boat. The rumors of merger talks may have been a way to show Washington that the companies are serious about restructuring and act as an impetus to the Treasury to come up with a bailout package soon.
Yesterday, US Treasury Secretary Henry Paulson promised a "quick and prudent" relief package for GM and Chrysler after a bailout measure failed to pass in the Congress earlier this month. Paulson will be tapping into the 700 billion dollar fund appropriated by Congress to bailout the collapsing financial sector. Paulson gave no indication as to how much aid he was willing to provide the two automakers.