Renault-Nissan may purchase 20 per cent stake in Chrysler
22 October 2008

Chrysler may abandon its GM merger plans and sell a stake to Renault-Nissan, according to reports from America.

The Detroit News reports that Cerberus Capital Management, which owns 80 per cent of Chrysler, has received the proposal from the French-Japanese partnership for a 20 per cent share of the company, but is thought to still favour a deal with GM.

A Renault-Nissan stake in Chrysler was first proposed in 2006, when Kirk Kerkorian was Chrysler's largest shareholder.

Having a non-US car maker as a Chrysler shareholder would make sense for the US government, as it would allow the 'big three' to continue competing without huge dealership cutbacks.

Chrysler has recently cancelled development of its Phoenix V6 petrol engine, a key element of any future model plans, suggesting that Cerberus has decided to go ahead with some kind of rationalisation.

The current global lack of credit has slowed progress on the GM deal, though one possible, cashless transaction involved GM handing Cerberus the remaining half of its GMAC financial services division in exchange for the private equity group's Chrysler shares. Cerberus has said that it still has access to a further $12bn of funding.

If Chrysler ended up owned by GM, with the largest car maker in the US, it would lead to tens of thousands of job losses in the car industry at a very politically sensitive time.

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Comments
4

23 October 2008

This would be full circle for Renault. They bought American Motors Corp which produced, among others, Jeep. They ran it as Renault North America for a while then sold it to Chrysler.

23 October 2008

You have this wrong Autocar. Cerberus already owns GMAC through a 51% controlling stake.

This is an excellent write up of the current state of play on the financial side by the Wall Street Journal:

http://online.wsj.com/article/SB122471276128660107.html?mod=googlenews_wsj

23 October 2008

I think the deal Autocar are refering to would be for GM (who owns the other 49% of GMAC) to swap those shares for the Cerberus holding in Chrysler. At the end of the process this deal would have no benefit that I can see - Chrysler have a cash pile but GM is burning cash faster than Chrysler, all that it would do is to burn Chrysler's cash faster and both companies would fail (or have to be nationalised?).

Anonymous

23 October 2008

Yes, I think the point is that the deal could involve GM handing over the remaining 49 per cent (ie a non-controlling half) stake in GMAC in exchange for Chrysler, allowing Cerberus to step away from the car making business.

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