Chrysler Driving Hard To Get A Deal Done By November

Reports emerged over the weekend saying that Chrysler was hoping to finalise a merger agreement with GM by November, preferably before Election Day, preventing the potential deal from becoming an issue in Michigan.

Dealscape: A report in The Detroit News over the weekend said the two carmakers want to get a merger deal in place before the election in the hope that an agreement will receive a more favourable hearing from each candidate before a winner is decided. A merger between two of the Big Three will have major implications for the battle ground state of Michigan and could present a thorny decision for both Senator Obama and Senator McCain.

But is GM even still in the running? As GM continues to struggle to find funding to acquire Chrysler, Cerberus is pushing ahead with negotiations with Renault-Nissan, even though the private equity firm prefers a deal with GM.

WSJ: Chrysler LLC may join an existing manufacturing and development alliance between Japan’s Nissan Motor Co. and France’s Renault SA, according to people familiar with the matter.

But a sale of the Auburn Hills, Mich., company to General Motors Corp. is still its preferred path, according to these people.

Cerberus Capital Management LP, Chrysler’s majority owner, is discussing having Nissan, and possibly Renault, acquire a minority stake in Chrysler, these people said.

It isn’t clear whether Chrysler or Cerberus also would be asked to purchase an interest in the Japanese and French auto makers in order to maintain a cross-shareholding relationship, they said.

Meanwhile, business professor and auto industry critic Peter Morici suggests that Chrysler might be better off filing for bankruptcy.

Dealscape: Morici, in a commentary e-mailed to reporters Monday, argues that Chrysler’s positives are not worth the considerable baggage that an acquisition would require. Specifically, Chrysler’s Jeep and minivans (pictured above) would not justify GM paying out heavy severances to workers it laid off to streamline operations and shutter Chrysler and Dodge’s operations.

“Simply, Chrysler has two good franchises that would complement GM’s product mix but those are hostage to an otherwise uncompetitive corporate structure” Morici wrote. “GM can’t fix those problems easily.”

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