Two of the most stalwart corporate names in America are considering joining forces, principally so they can participate in the federal government’s $700 billion bailout, according to an article in today’s Wall Street Journal.
The proposed marriage of General Motors Corp. and Chrysler LLC is based on finances and not much else, according to the Journal. Worried that it might run out of cash within a year, GM has its eyes on Chrysler’s $11 billion cash reserves. Cerberus Capital Management LP, meanwhile, which owns Chrysler as well as a 51% share of GMAC, GM’s lending operation, is looking to increase its ownership of the financier, while also converting GMAC into a bank holding company so that it can access funds under the Treasury Asset Relief Program (TARP).
Other institutions, such as Goldman Sachs and Morgan Stanley, have converted to bank holding companies recently.
It’s unclear what GM would do with Chrysler’s manufacturing arm, should the merger be completed. Also uncertain is what would happen to Chrysler’s captive financing arm, Chrysler Financial.
