GM held merger talks with Ford

[winovin]

If it had gone through, there really would be a Falcadore!

http://www.nytimes.com/2008/10/12/bu...ef=automobiles

G.M. Held Merger Talks With Ford Before Chrysler
By BILL VLASIC
Published: October 11, 2008 NY TIMES
DETROIT — Before General Motors began exploring a possible merger with Chrysler — talks that first came to light on Friday — G.M. proposed a similar deal with its other cross-town rival, the Ford Motor Company, two people with knowledge of the talks said Saturday.

G.M. executives approached Ford about a possible merger in July, but Ford rejected the idea and ended the discussions last month, these people said.

After Ford decided to remain independent amid an increasingly difficult auto market, G.M. turned its attention to Chrysler. For the last month, it has been in preliminary merger talks with Chrysler’s owner, the private-equity firm Cerberus Capital Management.

A deal is not certain, but people with knowledge of the talks described the chances of it happening as “50-50.”

The behind-the-scenes maneuvering illustrates the mounting pressure on the Big Three Detroit automakers to solve their enormous financial problems and stave off bankruptcy.

A G.M.-Chrysler merger, if it did occur, would have a wide-ranging impact on the American auto industry at one of the most tumultuous points in its history.

Both G.M. and Chrysler are losing market share in the United States and burning through billions of dollars in cash while they scramble to revamp their unprofitable North American operations.

But they may be running out of time. With auto sales at their lowest level in 15 years, both companies face the possibility of bankruptcy before their turnaround efforts take hold.

“These are not normal times,” said David Cole, chairman of the Center for Automotive Research in Ann Arbor, Mich. “The biggest problem is cash and whether these companies will have enough to survive this downturn.”

For G.M., which lost $15.5 billion in the second quarter alone, the strategy for survival appears to center on pursuing a mega-merger.

In July, G.M. approached Ford with a proposal to combine the operations of the two biggest American automakers. The talks involved several meetings between G.M.’s chairman, Rick Wagoner; its president, Frederick Henderson; Ford’s executive chairman, William C. Ford Jr.; and its chief executive, Alan R. Mulally, people with knowledge of the process said.

Ford broke off the talks in September, these people said. Mr. Ford and Mr. Mulally were said to have concluded that their company had a better chance to reorganize on its own than in tandem with another automaker.

A Ford spokesman, Mark Truby, declined Saturday to confirm the discussions with G.M., but he said Ford was determined to remain independent.

“We would not comment on any private business discussions, including discussions with other automakers and suppliers,” Mr. Truby said. “What we can say is that we are convinced our best opportunity is to continue to integrate Ford and leverage our global assets. That remains Ford’s focus.”

Talks between G.M. and Cerberus may take weeks to complete, and they could still be derailed by price issues and the challenges of integrating G.M. and Chrysler.

Cerberus is also talking with other automakers about a potential Chrysler deal, including Nissan Motor of Japan and Renault of France, people with knowledge of the situation said.

G.M. and Cerberus have held numerous meetings involving senior management of both companies but have yet to delve deeply into each other’s financial books and sales projections.

Cerberus appears committed to linking Chrysler to other auto companies, either through joint ventures, alliances or an outright merger or sale.

Chrysler executives have already struck some deals on products and manufacturing plans with competitors, including a deal with Nissan to provide a pickup truck to it in exchange for Nissan building a small car for Chrysler.

A Chrysler spokeswoman, Lori McTavish, declined Saturday to discuss any merger talks with G.M. but reiterated the company’s strategy to grow through partnerships.

“Chrysler, as a matter of policy, does not confirm or disclose the nature of its private business meetings,” Ms. McTavish said. “As we have said, the company is looking at a number of potential global partnerships as it explores growth opportunities around the world. Beyond those partnerships already announced, however, Chrysler has not formed any new agreements and has no further announcements at this time.”

Chrysler has struggled in the United States market since Cerberus acquired an 80.1 percent stake in the company for $7.4 billion last year from its previous owner, the German automaker Daimler.

Chrysler has cut thousands of jobs, slashed production and closed plants to try to balance the impact of a 25 percent drop in United States sales so far this year. But Chrysler has a substantial amount of cash, which probably would be of major interest to G.M.

As a privately held company, Chrysler is not required to disclose its financial results. In August, however, Cerberus said that Chrysler had about $11 billion in cash reserves.

[azaxr8]

I think ford arent in a much trouble as everyone says they are. This deal is to good to be true. I think you will find GM will die long before ford will.

[FPV 5TH]

Originally Posted by azaxr8

I think ford arent in a much trouble as everyone says they are. This deal is to good to be true. I think you will find GM will die long before ford will.

Oh i think Ford are in trouble too. They may be selling off most of their stake in Mazda now

[ZA-289]

Im glad this didn't happen!

[RS350]

Glad too this didn't happen imagin a ford commodore

[FPV8U]

Wouldn't that have been interisting.. Ford obviously confident in it's own recovery then..

[Fab]

GM-Chrysler?
I can just imagine a HSV with a 6.1 Hemi. lol

[csv8]

Next EPICA the SEBRING !!!!!!!!!!!!!!!!!!!!!!!!!

[charles_wif_xf]

Anyone claiming that Ford isn't in any trouble is nuts, however, they are in a far better position than GM. They have many divisions turning profits, unlike GM...

[BFZ Wagon]

GM have a lot of brands and release too many different models. Some of the models in the US are the same but with a Pontiac Badge instead of a Buick or Chev one. etc.
From memory, I can count 12 brands around the world that GM own/control.
Buick, Cadillac, Chevrolet, Daewoo, GMC, Holden, Hummer, Opel, Pontiac
Saab, Saturn, Vauxhall

Ford did have 8 but now really only have 5.
Ford owned/controlled brands
Ford, Lincoln, Mazda (1/3 interest), Mercury, Volvo

That's a lot of cars in all that lot. How do they all sell?

PS. I like big cars. We can't all have itty bitty tiny cars. The world would be way more boring than it already is. :P

[XR6_190]

Originally Posted by All Wheel Drive

GM have a lot of brands and release too many different models. Some of the models in the US are the same but with a Pontiac Badge instead of a Buick or Chev one. etc.
From memory, I can count 12 brands around the world that GM own/control.
Buick, Cadillac, Chevrolet, Daewoo, GMC, Holden, Hummer, Opel, Pontiac
Saab, Saturn, Vauxhall

Ford did have 8 but now really only have 5.
Ford owned/controlled brands
Ford, Lincoln, Mazda (1/3 interest), Mercury, Volvo

That's a lot of cars in all that lot. How do they all sell?

PS. I like big cars. We can't all have itty bitty tiny cars. The world would be way more boring than it already is. :P

Spot on about GM having too many brands, although I think that it is really only a serious problem in the US, I can understand Chev as the basic brand, then there is Pontiac as more of a performance orientated brand, and Cadillac as a more upmarket brand.

So where is the need for GMC, Saturn and Buick, every GMC product on the market in the US is also available as a Chevy, so what's the point? and as for Buick, aren't they an intermediary between Chev and Cadillac again whats the point?

All they do is cannabalise their own sales at the cost of running separate management teams, and having separate company running costs, hardly cost effective, Simplify guys!!

[vanman_75]

it would make you feel more comfy putting a chev in your toys but !

[ltd]

I have alot of faith in Alan Mulally. Coming from an aviation background where Boeing's arrogance cost them sales and allowed airbus to gain signifigant market share, Alan was the driving force behind the reforms to make them the market leader again including fuel efficiency drives on new aircraft. The sales of products under Alan Mulally's stweardship speak for themselves, and the guy is just an all round fantastic operator. With him at the helm I have no great fears for Ford.

[Scott]

^^ Did he make Boeing go FWD?

[Mark351]

Aren't Boeing in the poo again?

[ltd]

Originally Posted by Death351

Aren't Boeing in the poo again?

Not really, they are inundated with several trillion dollars worth of orders, but the aircraft engineers union has had everyone on strike since 6th September and hence, no work has been done in the factory since except for the 787 which has had pressure testing done. The average employee at boeing is on over 100K per year, and Boeing has offered 12% increase yet these guys want more, go figure.

V Australia has had their company launch delayed from the 20th December 08 to the 28th February 09 due to this strike, even though one of their new 777's is sitting on the flight line undergoing static testing. In compensation costs it is hurting Boeing, prolonged strikes like this produce no winners especially when you consider that for over a month now, no staff have been paid.

GTP006, he turned their fortunes around and pushed them to start making relevant aircraft like the 777 which has had back orders since its inception. Further, the 787 which was designed under his watch and focusses primarily on Fuel consumption has not even flown yet, but has already sold over 900 off at 180 million US$ each. If you wanted one you would have to wait for 2018 to get it.

[Ghiadude]

the problem may be that from the lofty hights of ford HQ he may not see/know that although the falcon isnt the most popular vehicle at the moment it could be a ripper if it was marketed correctly. The Falcon is and has been the better car in a lot of relevent ways(eg fuel economy...) and yet still struggles to sell. Its a problem thats been around since BA(remember the leak marketing strategy that had everyone talking?)weve had no kickass marketing since then.

[ehast13]

it doesn't really matter if a car maker owns a lot of brands, providing they are profitable.

vw made it work for a while

especially the platform sharing

[RATT]

The brands VW have are already established. Atleast in Europe anyway.