GM and Chrysler talking about a possible merger? | Rpmgo.com

Wow, the end of last week was really interesting, with most surprising news showing up. Not that surprising, actually, considering the current economy, but still, the chance of a merger between GM and Chrysler sounds really crazy and we can’t help wondering what the effects on the global auto industry will be. According to the New York Times, GM started talks with Cerberus Capital Management, Chrysler’s owner, about a month ago and apparently, on Friday, chances that the merger will happen were 50%-50%.

However, due to the companies’ terrible financial situations, the two sides might also decide that a merger will only make things worse. GM is facing its lowest stock price since the ’50s, with less than $5 a share ($43 a share last year). Not to mention that speculation has mounted recently about a possible bankruptcy filing by G.M., with credit rating firm Standard & Poor’s putting G.M. on negative credit watch last Thursday.

On the other hand, Chrysler, though being a private held company, doesn’t have to report financial stats, but still, everyone knows it’s not doing great, also. And rumors showed up about Cerberus negotiating possible deals with several other carmakers, like Nissan or Renault.

So, what’s your opinion on this? What do you think about the possibility of The Big Three becoming The Big Two?

Source: NY Times