General Motors is weighing a merger with Chrysler, The New York Times reports.
GM officials are talking with Cerberus Capital Management, the private equity firm that last year purchased an 80 percent stake in Chrysler from German auto company Daimler AG.
Discussions began more than a month ago, according to the Times.
Both automakers have been beset by hard times. Auto sales in the U.S. have fallen to their lowest point since 1991. Bloomberg notes today that GM hasn’t been profitable since 2004 and Chrysler has said it won’t make money this year.
GM’s stock has dropped from $43 per share last year, to less than $5 at Friday’s close.
A GM spokesman said yesterday that bankruptcy is not an option.
“Bankruptcy would not be in the interests of our employees, stockholders, suppliers or customers, and we believe speculation about a possible filing is exaggerated and unconstructive,” a company spokesman said.
Chrysler is cutting 1,000 salaried jobs and is trying to sell its Viper brand.
A merger could bring needed reductions in costs, but the companies have not yet begun to examine each other’s financials. Likely economies include closing plants and cutting jobs. Combined, the two companies employ 190,000 people in North America.
Cerberus is reported to be talking with other automakers as well, including Nissan and Renault. Cerberus also said last month that it is negotiating with Daimler to buy the remaining 20 percent stake in Chrysler.
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