December 18, 2008

GM denies merger talks

U.S. automaker General Motors Corp. denied reports that it had reopened merger talks with Chrysler LLC, while Chrysler refused to confirm the story.

The Wall Street Journal reported Thursday that Chrysler and GM Motors Corp. had reopened merger talks with Chrysler's owner saying it may part with a share of the company, sources said.

Both Chrysler and GM are negotiating with White House and Treasury officials to design a bailout plan as slumping sales have pushed both to the brink of bankruptcy.

The Journal reported that Cerberus Capital Management LP, Chrysler's owner, initiated the discussions with GM, although the two broke off merger discussions just weeks ago.

But, GM spokesman Greg Martin said it is not true. There are no merger talks, CNNMoney.com reported later.

The Journal speculated that a merger would help Cerberus keep its two struggling financial firms, GMAC LLC and Chrysler Financial.

Both auto giants are in trouble. Chrysler has said it needs $4 billion to survive, while GM has asked the government for $14 billion to see it through to the end of March.

Cerberus, meanwhile, has resisted pressure to supply Chrysler with fresh capital, claiming its charter prevents it from doing so, the Journal said.