GM-Chrysler merger and Cerberus--Very Little Options!

RPT-DEALTALK-Options scarce if GM-Chrysler merger talks fail

DETROIT, Oct 22 (Reuters) - As General Motors Corp (GM.N: Quote, Profile, Research, Stock Buzz) pushes ahead with talks to acquire Chrysler LLC, uneasy suppliers and workers are bracing for a deal that would combine two struggling automakers and cost tens of thousands of jobs.

But as GM struggles to line up financing for an acquisition, attention has turned to an even more uncertain prospect: What happens if the controversial deal falls apart?

For Chrysler, owned for the past year by Cerberus Capital Management, the options are dwindling, according to bankers, consultants and experts on corporate strategy.

If GM pulls out, people briefed on the talks expect Cerberus to seek another buyer for the maker of Jeep, Dodge and Chrysler models. Failing that, Cerberus would likely look to break up Chrysler and sell whatever assets it could, they said.

"Selling off assets will only become strategy if GM is off the table and they have not found any other buyer," said one person familiar with the matter, who estimated the GM deal now has about a 1-in-3 chance of success because of difficulties in securing outside funding.

Another person familiar with Chrysler's planning said the automaker had drawn up scenarios that would involve selling key assets like the Jeep brand, its specialty parts business Mopar and even its engineering operations if Cerberus is pushed to break up the 80-year-old automaker.

Both GM and Chrysler have declined to comment when questioned about the merger talks. Both automakers have also ruled out bankruptcy as an option as they restructure......Read More

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