Chrysler may be sold in pieces

[VenSeattle]

Chrysler may be sold in pieces to other companies
October 22, 2008 9:46 AM ET
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DETROIT (AP) - A person briefed on discussions about selling Chrysler LLC says the automaker could be sold in pieces to other companies.

Chrysler's majority owner, Cerberus Capital Management LP, has been talking with General Motors Corp., the combined companies Nissan Motor Co.-Renault SA and other companies about selling Chrysler.

The person said Tuesday night that many combinations are being discussed. The person asked not to be identified because the talks are private.

Nissan seeks about 20 percent of Chrysler: paper
October 22, 2008 6:07 AM ET
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TOKYO (Reuters) - Nissan Motor Co is proposing to buy about 20 percent of Chrysler and bring the troubled U.S. automaker into the Franco-Japanese alliance with Renault SA , the Detroit News reported on Wednesday, citing sources familiar with the situation.

The offer is now before private equity firm Cerberus Capital Management , which holds 80 percent of Chrysler, the paper said. Citing another source close to the talks, the paper also said Cerberus founder and chief executive Stephen Feinberg still favors a deal with General Motors Corp .

Nissan declined to confirm or deny the report.

"This is more of the same noise and we have no comment to make on any of the recent speculations," Simon Sproule, head spokesman at Nissan, said.

GM, looking for a lifeline to replenish is depleted coffers, has been pushing ahead with talks to acquire Chrysler, people briefed on the talks have told Reuters. Although it does not report financial information, Cerberus has said Chrysler ended June with $11.7 billion in cash.

The Financial Times reported earlier, however, that GM was looking for a large investment from outside investors as a possible alternative to a deal with Chrysler.

Citing unnamed sources, Detroit News said Carlos Ghosn, chief executive of both Renault and Nissan, had sent a proposal in recent days that included revisions to a draft agreement prepared by Cerberus.

Since 2006, when Nissan and Renault studied a possible three-way link-up with GM, Ghosn has held to his position that a trans-continental alliance that includes North America would benefit the existing one. Since forming their equity tie-up in 1999, Nissan and Renault have enjoyed billions of dollars in cost savings every year.

Led by Executive Vice President Carlos Tavares, Nissan has held ongoing talks with Chrysler over the past year that have so far led to three separate projects for the mutual supply of vehicles under original equipment manufacturing (OEM) deals.

While Renault would be part of any partnership with Chrysler, Nissan would acquire the stake because it has cash on hand, Detroit News said. Renault's debts have mounted, especially after buying a 25 percent stake in Russian automaker Avtovaz for more than $1 billion.

Investors, who balked at the three-way talks with GM two years ago, are likely to react similarly this time.

"It's hard to see the benefit when the global auto market is slowing down," Takeshi Osawa, senior fund manager at Norinchukin Zenkyoren Asset Management said. "I'm not sure Nissan can afford to make such a move. It's likely to be negative on its shares."

Shares in Renault were down 4.8 percent in Paris, underperforming the 2.7 percent fall in the CAC-40 index.

Nissan's shares ended down 9 percent in Tokyo before the report, mirroring sharp falls in other auto stocks as the yen surged.

Owner said to weigh selling Chrysler in pieces
October 22, 2008 1:59 PM ET
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DETROIT (AP) - Chrysler LLC could be sold in pieces to other companies as its majority shareholder Cerberus Capital Management LP seeks to exit the auto business, according to a person briefed on the discussions.

Cerberus, the New York-based private equity firm, has been shopping the beleaguered automaker to General Motors Corp., the combined Nissan Motor Co. and Renault SA and other companies.

Many combinations are being discussed, said the person who has been briefed on the talks. The person asked not to be identified because the discussions are private.

Chrysler spokeswoman Shawn Morgan and Cerberus spokesman Peter Duda declined to comment.

Cerberus's efforts to exit the automobile industry have been widely reported in recent weeks, though speculation has swirled over what shape the final deal might take.

One deal being discussed reportedly calls for Cerberus to hand over Chrysler to GM in exchange for GM's 49 percent stake in GMAC Financial Services.

GM sold a 51 percent stake in its finance arm to Cerberus in 2006. Cerberus also would get an equity stake in GM, hoping to get a good return should GM recover when U.S. auto sales bounce back from a serious slump.

GM is said to be interested in Chrysler for its cash. Chrysler, whose sales have dropped 25 percent during the first nine months of the year, reportedly has about $11 billion available.

It also has debt, but the amount hasn't been disclosed because Chrysler a private company. Cerberus bought an 80.1 percent stake in Chrysler from Germany's Daimler AG in a $7.4 billion deal last year.

Chrysler's cash may not be enough for GM to take on its money-losing rival, though, and the federal government may be involved in an effort to inject cash to prop up the deal.

"All GM really wants out of this deal is the money that Chrysler is sitting on," said John Wolconowicz, auto analyst for the consulting firm Global Insight. "They really don't want any of the rest of it."

Wolconowicz said breaking Chrysler into multiple pieces is a viable scenario, with Nissan-Renault possibly getting a piece of the company. Such an arrangement would make sense, he said, because Chrysler and Nissan are already cooperating on several car-making ventures.

"Nissan has existing agreements with Chrysler that go both ways," he said, referring to a deal announced earlier this year in which Nissan would build small cars for Chrysler, while Chrysler will make a full-size pickup truck designed by Nissan.

Whatever the final outcome of the negotiations, analysts agree that it will have to involve widespread factory closures and layoffs for some of Chrysler's 66,409 employees, resulting in a leaner, more efficient — and significantly downsized — automaker.

Michigan Gov. Jennifer Granholm told reporters in Lansing on Wednesday that a GM-Chrysler merger could lead to as many as 30,000 job losses, with Michigan being hit harder than any other state.

"If GM and Chrysler merge in a way that costs thousands of jobs, it will hurt Michigan, there's no question about it," she said. "If Nissan-Renault is involved, it may be a different scenario."

Granholm said she has been speaking with executives involved, adding, "I think something is going to happen."

Other analysts note that financing for the deal remains a key element to any final deal. Citi Investment Research analyst Itay Michaeli said in a recent report that a combined GM and Chrysler would require at least $10 billion to $12 billion in fresh liquidity.

However, this could pose a problem given the turbulence in the capital markets, Michaeli said, making it "feasible that the government could step in to provide support."

Detroit-based GM is itself burning up cash, going through more than $1 billion per month. Several analysts have predicted it will reach its minimum operating cash level of $14 billion sometime next year.

GM's sales were down 18 percent for the first nine months of this year. The company has lost $57.5 billion in the past 18 months, although much of that comes from noncash tax accounting changes.

[ZL-1]

Sell Jeep to Renault-Nissan (perhaps adding the Dodge truck business), and leave the rest to GM (essentially the 11bn in cash, since the brands are of no value to GM) in exchange for the remaining 49% of GMAC?

[CMG]

LOL!

Ok, what automaker has NOT taken over Chrysler in internet rumors yet?

:AH-HA_wink:

It's almost like the rumors are getting comedic.

[CARBIZ]

Color me stupid, but how can GM (or anybody) 'buy' Chrysler just to get their hands on the $11b cash? Won't Cerberus want $11b, plus whatever else they think Chrysler is worth?

[A Horse With No Name]

Color me stupid, but how can GM (or anybody) 'buy' Chrysler just to get their hands on the $11b cash? Won't Cerberus want $11b, plus whatever else they think Chrysler is worth?

I was wondering the same thing myself, Mr 'biz.

Chris

[CMG]

Color me stupid, but how can GM (or anybody) 'buy' Chrysler just to get their hands on the $11b cash? Won't Cerberus want $11b, plus whatever else they think Chrysler is worth?

It's just nuts.

I've seen on some other automotive forums some guys are thinking Cerberus is actually tring to buy all of GM's auto divisions. LOL

I guess it depends on which forum you are on, but the rumors swirling around go from possibilities to the utter insane.

[CMG]

I was wondering the same thing myself, Mr 'biz.

Chris

You, me, Carbiz, and a couple other million people.....

[Satty]

Cerebrus just offered to trade me Chrysler for our Prius, one of the dogs (the annoying one) and $1300.

[CMG]

Cerebrus just offered to trade me Chrysler for our Prius, one of the dogs (the annoying one) and $1300.

Have you thought about how you are going to spend the $11 billion dollars yet?!?!

[Robert Hall]

It's just nuts.

I've seen on some other automotive forums some guys are thinking Cerberus is actually tring to buy all of GM's auto divisions. LOL

I guess it depends on which forum you are on, but the rumors swirling around go from possibilities to the utter insane.

On another forum people were speculating that the Charger and Challenger would be badged as Pontiacs, the Chrysler 300 as a Buick.

[FUTURE_OF_GM]

"Nissan has existing agreements with Chrysler that go both ways," he said, referring to a deal announced earlier this year in which Nissan would build small cars for Chrysler, while Chrysler will make a full-size pickup truck designed by Nissan.

Does the wording of that bother anyone else?

Nissan didn't design sh*t for their new full-size Ram clone.

"If GM and Chrysler merge in a way that costs thousands of jobs, it will hurt Michigan, there's no question about it," she said. "If Nissan-Renault is involved, it may be a different scenario."

No surprise that she is "rooting for to other team."

I wouldn't mind seeing GM get Jeep.

[Robert Hall]

I wouldn't mind seeing GM get Jeep.

A scenario where the Grand Cherokee gets the TB's straight 6 could be interesting.... a V6 just seems out of place in a Jeep, IMHO...

[smk4565]

Cerebus could probably get the most money if they sold it off in pieces so ti wouldn't surprise me. Maybe GM gets Chrysler and Nissan-Renault get Dodge pickups and Jeep.

[enzl]

Does the wording of that bother anyone else?

Nissan didn't design sh*t for their new full-size Ram clone.

No surprise that she is "rooting for to other team."

I wouldn't mind seeing GM get Jeep.

You realize that Chrysler doing all the work on the Nissan truck is a good thing for them, right? Nor have you seen either Nissan's cars being built for Chrysler, nor the Titan replacement? How would you possibly know who did what then?

2nd-you realize if GM gets any part of Chrylser, MI loses even more jobs, right? I'd say that's her concern--and probably should be yours if Chrysler is to survive in any way shape or form.