General Motors has reportedly asked the U.S. government for $10 billion in aid to support its acquisition of Chrysler LLC from Cerberus Capital Management. Roughly $3 billion of the proposed aid would be in exchange for preferred stock in a merged automaker.
GM has been in talks with Cerberus since last month, but the talks have stalled due to difficulty in securing the funds, which is where the U.S. government would come in.
“The automakers are facing a maelstrom and that’s why I think an unprecedented government infusion could happen,” said Efraim Levy, an automotive equity analyst with S&P.
According to an undisclosed source the U.S. Treasury Department is considering a request for direct aid to facilitate the merger and a decision could come this week.
Both automakers feel that the merger would help save American jobs, but how exactly is unknown. If both automakers merge its expected that many models/ brands could be killed, which would result in factory closures, layoffs, etc.
Full Story: Reuters