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Chrysler no longer in talks with Renault-Nissa
2008-11-02
WASHINGTON - Chrysler is no longer in talks with Renault-Nissan, leaving General Motors the apparent lead candidate to acquire the US automaker, The Wall Street Journal said in its online edition Sunday. "Cerberus Capital Management LP, the private equity fund that owns an 80.1 percent stake in Chrysler, ended the discussions in favor of concentrating on GM," the business daily said citing an unnamed person familiar with the private discussions. A potential partnership with the Renault-Nissan automaker group appeared a possibility last month after reports Cerberus was looking to divest itself of the third largest US-based carmaker amid a continued slowdown in the global automotive industry. Last week Renault-Nissan CEO Carlos Gohsn shrugged off the idea of talks with Chrysler as speculation. Renault-Nissan may have been interested in Chrysler to move quickly into the US market, the Journal said. "Speculation continues to swirl that Cerberus is looking to make a move on Chrysler as early as Tuesday but has run into problems in lobbying for federal aid. The Bush administration has reportedly backed away from giving the aid despite an intensifying push from senators and congressional leaders who are concerned that Chrysler may simply fall into bankruptcy without a new partner," the Journal added. Much of the pressure to cut a deal seems to be coming from banks which stand to lose billions should Cerberus fail to meet its obligations. J.P. Morgan and Citibank were part of a consortium which advanced Cerberus more than seven billion dollars to purchase Chrysler from Daimler AG in August 2007, just before financial markets started to sputter from the first tremors of the housing and credit crisis and demand for automobiles fell sharply. Additionally, pressure comes from GM's financial arm, GMAC, which will have to raise an additional one billion dollars to cover bonds that will mature in January. Cerberus owns a controlling stake in GMAC. Several analysts and executives from other automakers have expressed skepticism about whether a GM-Chrysler merger would deliver any kind of benefits.
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