GM’s (GM) CEO said that there would probably not be mergers in the US car industry.
But, he did not mention his company’s potential bid for Chrysler (DCX). And, why should he? By making the comments, he has devalued Chrysler by hinting that he might have no interest. Nice way to get the price down.
Private equity groups including Blackstone Group and Cerberus Capital Management LP are kicking the tires, but it is very difficult to see them being able to take much out in costs. They cannot use another company’s management, production and product design to cut costs.
But, GM has sent up a smoke screen that says it will not compete with private equity on price. If Daimler wants to have a piece of GM in exchange for its US arim and thinks that the larger company can take out a lot of costs, then perhaps there is a deal. Otherwise, all the Germans get is cash. That may be enough, but no one seems ready to fight over the rights to own the Chrysler operations.
Douglas A. McIntyre
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