Saturday, October 11, 2008

From combined dispatches

General Motors and Chrysler have held preliminary talks about a possible merger that would reduce Detroit’s Big Three to the Big Two.

According to the Wall Street Journal, citing “people familiar with the matter,” General Motors Corp. has recently been in discussions about acquiring Chrysler LLC from Cerberus Capital Management LLC.

The business newspaper said the upheaval in financial markets has halted the talks for now, but they still signal that major shake-ups are likely in the battered U.S. auto industry. If markets stabilize, the sources told the Journal, the talks could be renewed because both GM and Cerberus want to move quickly.

General Motors shares fell as low as $4 early Friday, the lowest price for the stock since 1949, but recovered slightly to close at $4.89 on the New York Stock Exchange. Ford Motor Co., America’s other leading automaker, ended a miserable week on Wall Street by closing at less than $2 a share.

Both GM and Ford on Friday ruled out seeking bankruptcy protection.

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