According to [yet more] unnamed sources for The Wall Street Journal, General Motors’ Board of Bystanders put the kibosh on a Chrysler merger deal. “Despite huge losses over the past four years, a plunge in GM’s stock price and growing worries about whether the auto maker has enough cash to turn itself around, GM’s board has continued to support Chairman and Chief Executive Rick Wagoner.” Nice set-up. “But the board’s cautious reaction to the proposed merger suggests it may assert itself more than in the past if Mr. Wagoner and his team try to move ahead with a Chrysler deal.” You would think that in times like this the board would be asserting its authority in, I dunno, setting the strategic direction for the company, rather than, say, simply reacting to the latest thoughts of the CEO whose wiped tens of billions off the company’s worth and plunged it into a terminal nosedive. But then again, reacting instead of leading is the GM way from top to bottom. Anyway, as that’s that, let’s hear what AutoNation’s CEO Michael “No Not That One” Jackson has to say about all this meshugas. Jump!
When it comes to the 2.8’s overall position in the marketplace, Michael Jackson said GM, Ford and Chrysler are “not going to dominate in the U.S. and elsewhere in the world as they have in the past, and they’ll have to find a piece of the pie where they can be successful and profitable.” In other words, Detroit’s former lions are all shrinking and the game of musical chairs continues. But as you made the jump, and probably already knew that, how about this, buried at the bottom. “In an effort to boost Ford’s liquidity, its board has approved the sale of at least part of Ford’s controlling stake in Mazda Motor Co., according to several people briefed on the matter [unnamed sources rule!]. “Selling some of it 33.4 per cent stake in Mazda is viewed as an attractive option for Ford because unlike some assets, the stake wasn’t used as collateral when the auto maker secured $US24 billion in financing two years ago.” Huh.
I still can’t believe anyone was serious about merging GM and Chrysler (besides Chrysler). It’s just too stupid to believe.
Agreed.
Actually, I can think of two semi-plausible reasons for GM and Chrysler to hookup.
1. As the ultimate poison pill to prevent GM from being taken over by another company.
2. Increase GM’s share at the federal bailout trough.
So the board of directors said that a Chrysler merger is dumb? So they’re actually useful for something, then…
Third Reason:
Too Big to Fail !
On a different topic, with the stock price SO LOW, why hasn’t GM/Ford just buy their own stock and go private ?
Use the money from the Bailout
Definitely stupid if you’re GM. But from Cerberus’ thinking, a great, although wishfull thinking solution to their problem of what to do with Chrysler. Imagine, if Cerberus was able to convince fool GM into taking Chrysler off their hands via the trade of the other half of GMAC?
What would they gain by going private?
Being a private company under Cerberus certainly hasn’t been a magic elixir for Chrysler.
The whole “we can do better without Wall Street watching” line of crap is just that, a line of crap.
They are getting ready to release more stock to get some cash. Buying up all their shares of stock to become “private” would be extremely stupid, I don’t even think Rick is that dumb. What money would they run the company with after they just released themselves from investors? What they need is more investors to dump money into their coffers?
All you people saying they should buy back shares should look at the companies that do buy their shares back, like Exxon/Mobile, they are extrememly profiable and using their PROFITS to buy back the company. Notice that word PROFIT that is missing from GM situation.
Agree with toxicroach.
The “merger” was featured in today local news.
Meanwhile back at the ranch…GM announced this morning they are closing the Janesville, Wisconsin plant, on December 23,(2008). Merry Christmas.
Ahh, a GM-Chrysler merger. Kind of sounds like two crack heads who land in court administered drug treatment. Both deny there is any problem and then work together to get out of rehab. This way they can get out an smoke more crack.
“What would they gain by going private?”
An owner who could fire their sorry @$$e$.
American Leyland
coming in January
that’s the idea, anyway
Solidarity Forever!
What would they gain from going private?
1- They could save money by not having to pay for a useless board of directors.
2- Probably save another $100mm/year to not have to comply with public company accounting rules, reporting,etc.
3- Theoretically could pursue longer-term plans rather than trying to cater earings/losses to quarterly reports (though I don’t think that mental capability exists within existing GM leadership).
4- Could wait a few years, if they survive that long, and have a new IPO… the company would still be a mess but the executives could pay themselves and their bankers a bundle of money.
On the other hand, it does nothing to free them of their debt, stifling union contracts, and overweight organizational structure.
A basic question: If GM does declare Chapter 11 would they have any more power to toss the unions and renegotiate contract than they do now? I would think so. I’m trying to blame the unions for all of GM’s troubles, I’m just wondering if bankruptcy wouldn’t allow them to restructure the whole company. Then again, with the current leadership still in place they don’t have the ability anyway.
Am i the only one who thinks that Wagoner should have been fired like 4 years ago?
stevelovescars, GM and Chrysler have to have a board of directors. How else could they vote themselves huge “bonus payments” at taxpayer’s expense?
Mike, fire Wagoner? He as generated billions of bonus cheques for the GM corporate brass. This is his exact duty.
I read on here and other sites many criticisms about Nardelli and Cerberus in regards to the management of Chrysler. Can anyone explain to me what has been so bad? Given the fact that the sale took place just over a year ago and given the 9 years Daimler had to wreak havoc on Chrysler, plus the economic “crisis”, what more can they do? IF Chrysler indeed has 11 billion on hand and GM, being much larger, ONLY has 15 billion, it seems to me they are at least treading water in comparison to the others. Am I wrong?
“Actually, I can think of two semi-plausible reasons for GM and Chrysler to hookup.”
Another: only one set of bankruptcy lawyers instead of two.
A GM-Chrysler merger is like two sinking ships in the middle of the ocean tying on to one another thinking it will help.
toxicroach :
I still can’t believe anyone was serious about merging GM and Chrysler (besides Chrysler). It’s just too stupid to believe.
Under normal circumstances, yes. It is an insanity of the highest order.
Which is exactly why a merger would not surprise me. At all.
In fact, NOTHING would surprise me at this point. GM declaring that they are going to stop making real cars and just start making die-cast models, for example. Nope, not a surprise.
Or Chrysler declaring that they’re going to start making mopeds. Hey, it sounds SIMILAR to “Mopar.” No surprise here, either…
A BM/Chrysler merger is like the company that built the Titanic buying the Hindenburg.
Is it not possible that GM would want to merge with Chrysler in order to create the single biggest dysfunctional, debt-ridden entity in the history of human civilization, thereby scraping open a hole in the fabric of space/time and in so doing releasing, into this dimension, a species of interstellar life forms who, by no accident, are able to survive only within, say, a G5 or this lovely Sebring that, you know, another couple were just looking at today…I think they’ve gone to the bank in fact…
When Gm stock hit 5 bucks a share I bought 1000 shares. This was less then 2 weeks ago. My thought was it was a good buy. Now this borrowing money to buy a loosing Chrysler has me concerned. Lou Dobbs doesn’t like it either. He states the bail out merger is like paying GM to cut Jobs.