Comments on: GM Tries to Sell Investors on Chrysler Merger “Synergy”

By: Geotpf

Geotpf — Tue, 21 Oct 2008 15:26:47 +0000

Conslaw-That’s a good point. If Chrysler really has 11 billion in cash just lying around, and they really want to merge with GM, why don’t they just buy up all of GM’s stock (at a cost of 3 billion)? Then, they could sell the rest of GMAC to Cerberus itself (selling GMAC to itself, in effect, but taking all of GMAC out of GM-Chrysler and into Cerberus’s head office), and then Cerberus could spin off the GM-Chrysler combo (such stock would have to be worth at least the 3 billion they paid for GM initially). This would result in exactly the same result as what appears to be proposed.

They don’t do this because there is no 11 billion.

By: Conslaw

Conslaw — Tue, 21 Oct 2008 14:39:12 +0000

The odds of there actually being $11 billion in the bank after GM & Chrysler merge are about 11 billion to one. If Chrysler really had $11 billion in the bank, why would they be negotiating to be acquired by General Motors, a company with a market cap (total market value) of $3 billion. Plus GM is losing at least $1 billion per month?

At best, Chrysler’s real non-committed cash is in the $3-5 billion range, and the only reason Chrysler has money is that they have cut back on R&D. Chrysler has virtually nothing in the pipeline to replace the models that are already selling 33% less than they did last year.

Let’s say Chrysler has 3 billion in cash to devote to the deal. For Chrysler to lay off 30,000 redundant employees and give them the typical $100,000 per employee buyout package, it would take $3,000,000,000 in cash.

By: 50merc

50merc — Tue, 21 Oct 2008 04:00:40 +0000

The problem now for GM and Chrysler is they can’t (without declaring bankruptcy) get rid of excess workers and excess dealers without spending billions to persuade them to go away quietly.

Exactly how would a merged GM-Chrysler be able to do those things without declaring bankruptcy?

By: Usta Bee

Usta Bee — Tue, 21 Oct 2008 01:15:21 +0000

The Challenger and the Camaro competing against each other and both built by the same company. Yep, that’s GM’s style alright. Maybe they could rebadge the Challenger as a Pontiac. ;)

By: Wolven

Wolven — Tue, 21 Oct 2008 00:23:38 +0000

The only “synergy” GM is looking at is; “Hey, if we take Chrysler, in addition to the “supposed” $11 Billion cash they have horded, maybe we can get Chryslers 1/3 of all the “bail out” cash as well!” Hoo Ah…

By: indi500fan

indi500fan — Mon, 20 Oct 2008 23:22:36 +0000

@ Martin Schwoerer

give that man a cigar
he’s got it right

By: seoultrain

seoultrain — Mon, 20 Oct 2008 22:53:18 +0000

Conslaw, it seems like Pinky’s going solo on this one.

By: Conslaw

Conslaw — Mon, 20 Oct 2008 22:39:00 +0000

This plan is looking more and more like a Pinky and the Brain plan to take over the world.

By: toxicroach

toxicroach — Mon, 20 Oct 2008 21:40:57 +0000

We’ll be very lucky if 40,000 is the extent of the job losses from this whole debacle. Very lucky indeed.

Who the hell is going to lend GM the money needed to pay for the decimation of Chrysler?

It’s going to require outside funds to kill Chrysler… which means that 11 bill they have in the kitty ain’t enough. Only the government would be stupid enough to loan a junk bond rated company the cash to buyout a bankrupt company, and I don’t know how the hell they plan on getting the government to sign off on canning 40,000 people. I’d sure love to be the politician who voted to put 40,000 union workers out of a job.

If the 3 headed dog won’t spend its own money to get out of their own debacle, then why should anyone else?

I bet Dr. Z feels really smart right now.

By: Martin Schwoerer

Martin Schwoerer — Mon, 20 Oct 2008 21:31:51 +0000

They say synergy, they mean too big for the government to let fail.

That’s the only thing going for this monster idea.

The car biz is like Hollywood: execs who have no fantasy and no ideas go for a sequel, or for a combo. GM/Chrysler is like Frankenstein Fights the Werewolf, like Godzilla vs Mothra, like Alien vs Predator. A simple idea that might take you through the next two quarters.

By: NickR

NickR — Mon, 20 Oct 2008 21:31:12 +0000

That pitch touts a combined GM-Chrysler as delivering a united entity with an even greater magnitude of redundant models, an even greater excess of underutilized plants, an absurd number of dealers, as well as providing an enormous distraction at a time when GM and Chrysler can ill afford one.

By: TexN

TexN — Mon, 20 Oct 2008 21:24:32 +0000

Putting on my “optimist hat” for a minute leads me to this thought: if the combined GM / Chrysler corporation starts with an approximate 36% market share, those old GM “29%” lapel pins should be back in vogue in about 6 months time. Yeah merger!!!!!

By: TexN

TexN — Mon, 20 Oct 2008 21:15:08 +0000

Is a can of “turd polish” available from my local Mopar dealer?

By: Edward Niedermeyer

Edward Niedermeyer — Mon, 20 Oct 2008 21:12:45 +0000

Forty. Thousand. Jobs.

Watch. This. Space.

By: seoultrain

seoultrain — Mon, 20 Oct 2008 21:08:28 +0000

Opposite of synergy? The New York Knicks.

By: bjcpdx

bjcpdx — Mon, 20 Oct 2008 21:08:28 +0000

Oh dear. Whenever the word “synergy” pops up, it’s usually the beginning of the end. Bet you a share of GM stock that the next story we hear about this disaster contains the word “paradigm”.

By: Cicero

Cicero — Mon, 20 Oct 2008 21:00:23 +0000

What word is the exact opposite of synergy? Whatever it is, that’s what GM and Chrysler have.