GM, Chrysler Merger Talks

Southfield (WWJ)  -- General Motors's stock jumped nearly two dollars after reports the automaker was looking into a possible merger with Chrysler.  Chrysler's CEO acknowledged talks "with outside parties" but said the company hasn't reached any new deals. 

In a memo to employees obtained Monday by The Associated Press, Bob Nardelli says Chrysler doesn't comment on its private meetings. But he says the automaker has spoken with outsiders interested in "exploring future possibilities.''

Nardelli's memo notes that Chrysler already has announced agreements with Nissan and Volkswagen to jointly make some vehicles. But he says Chrysler hadn't formed any new agreements and has no announcements to make right now. 

Reports say the Detroit-based automaker was in talks with Cerberus Capital Management, which owns 80.1 % of Chrysler, about a possible swap involving GMAC.

The financial crisis interrupted the talks, however they could resume soon.  

The Wall Street Journal says GM’s own board is cool on the idea after discussing the matter during a formal meeting last week, then talking more about it during a Friday conference call.  

There also are reports that General Motors is trying to sell the 49 percent of GMAC finance that that it still owns to raise several billion dollars.  Cerberus owns a controlling stake in GMAC. 

The Detroit News reports Cerberus is looking at other, undisclosed options for Chrysler.  Although one source told the paper there were "numerous" other possible options. 

Auto analysts question why General Motors would want to add more brands and dealerships when some say GM already has too many of each. 

General Motors stock closed last week at $4.89.

Click here for more on the merger talks.

Meanwhile, GM announced Tuesday it will idle its Janesville, Wisconsin, sport utility vehicle factory on Dec. 23, earlier than the company had expected.

The factory employs 1,200 workers and makes the GMC Yukon, Chevrolet Tahoe and Chevrolet Suburban SUVs.
  
GM spokesman Chris Lee said Monday the market for those vehicles is shrinking, so the automaker had to make the difficult decision to idle the factory early.  The company previously had said it would shut down Janesville and three other pickup truck and SUV factories by 2010.

Earlier this month, GM moved up the closure of another of those plants, an SUV factory in Moraine, Ohio. It also will close Dec. 23.