Chrysler's Nardelli says US sales slump creates environment for auto industry consolidation
Chrysler LLC Chief Executive Bob Nardelli said Thursday that a steep decline in U.S. auto sales has created an environment for industry consolidation, but he would not comment on reports that talks are accelerating for General Motors Corp. to acquire his company.
Cerberus bought its stake in Chrysler in 2007 from Daimler AG in a $7.4 billion deal. Cerberus and Daimler confirmed last month that they are in talks for the private equity firm to acquire Daimler's remaining 19.9 percent Chrysler stake.
Speaking on the CNBC cable channel, Nardelli said Chrysler has been open about looking for partners and creating alliances, but he would not address the GM discussions. However, he said the U.S. auto sales slump has set the stage for industry consolidation.
"It certainly creates an environment for consolidation where you can get synergies of productivity that will allow you to be more competitive, not only here in the U.S. market, but on a global basis," he said.
GM has discussed a merger or acquisition with Cerberus Capital Management LP, the New York private equity firm that owns 80.1 percent of Chrysler, a person familiar with the negotiations told The Associated Press last week.
My Take: Look, the private equity guys have gotten their tails kicked in the mortgage industry. They got in over their heads with Chrysler and I think they are trying to find a way to get out of this deal ASAP!
If you have read the papers over the last few years you would know that the private equity guys raised a TON of $$$ and chased ALOT of investment deals and have been BURNED by many of their investments. This one really has my eyebrows raised since GM has no $$$ to buy other companies as their existing business is hemorhaging $1 billion a month!. They are a DYING company themselves!
Owning an auto company as people talk about the next "great depression" seems pretty NUTS to me, let alone talking about one U.S. auto company running at 60%-70% capacity buying out another one. Consolidation will likely happen but due to BANKRUPTCY. Will the "greater fool" theory winout and GM buys Chrysler?