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Discussion Starter · #1 ·
SOURCE: AutoNews.com

Report: Nissan seeks about 20% of Chrysler
Automotive News
October 22, 2008 - 6:00 am ET

TOKYO (Reuters) -- Nissan is proposing to buy about 20 percent of Chrysler and bring the troubled U.S. automaker into the Franco-Japanese alliance with Renault, the Detroit News reported on Wednesday, citing sources familiar with the situation.

The offer is now before private equity firm Cerberus Capital Management, which holds 80 percent of Chrysler, the paper said. Citing another source close to the talks, the paper also said Cerberus founder and CEO Stephen Feinberg still favors a deal with General Motors.

Nissan declined to confirm or deny the report.

"This is more of the same noise and we have no comment to make on any of the recent speculations," Simon Sproule, head spokesman at Nissan, said.

GM, looking for a lifeline to replenish is depleted coffers, has been pushing ahead with talks to acquire Chrysler, people briefed on the talks have told Reuters. Although it does not report financial information, Cerberus has said Chrysler ended June with $11.7 billion in cash.

The Financial Times reported earlier, however, that GM was looking for a large investment from outside investors as a possible alternative to a deal with Chrysler.

Citing unnamed sources, Detroit News said Carlos Ghosn, CEO of both Renault and Nissan, had sent a proposal in recent days that included revisions to a draft agreement prepared by Cerberus.

Since 2006, when Nissan and Renault studied a possible three-way link-up with GM, Ghosn has held to his position that a trans-continental alliance that includes North America would benefit the existing one. Since forming their equity tie-up in 1999, Nissan and Renault have enjoyed billions of dollars in cost savings every year.

Led by Executive Vice President Carlos Tavares, Nissan has held ongoing talks with Chrysler over the past year that have so far led to three separate projects for the mutual supply of vehicles under original equipment manufacturing (OEM) deals.

While Renault would be part of any partnership with Chrysler, Nissan would acquire the stake because it has cash on hand, Detroit News said. Renault's debts have mounted, especially after buying a 25 percent stake in Russian automaker Avtovaz for more than $1 billion.

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Discussion Starter · #2 ·
If this is really an alternative that's being considered, then Chrysler should be invited to take an equal stake out in Nissan and/or Renault. I think that's the only way to create "parity" in the partnership and put some teeth into the "alliance".

But that's just me.
 

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Given the demonstrated failure of the capitalist model, perhaps now is the time to consider nationalization of the US North American Automotive Operations. A core industrial base is vital to the security and welfare of the United States. The socialist model has much to recommend it. The wretched excess of executive compensation can be reined in, and with Government universal single payer health care, major drags on industrial performance can be eliminated. Capitalism is a FAILURE!
 

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Given the demonstrated failure of the capitalist model, perhaps now is the time to consider nationalization of the US North American Automotive Operations. A core industrial base is vital to the security and welfare of the United States. The socialist model has much to recommend it. The wretched excess of executive compensation can be reined in, and with Government universal single payer health care, major drags on industrial performance can be eliminated. Capitalism is a FAILURE!
orly? It sure seems that Capitalism has produced the overwhelming majority of viable motor vehicle production used in the world today.

Unless you expect us all to start driving Trabants?

Hint: work on your delivery. Failed political theories take so much more effort to be convincing.
 

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orly? It sure seems that Capitalism has produced the overwhelming majority of viable motor vehicle production used in the world today.

Unless you expect us all to start driving Trabants?

Hint: work on your delivery. Failed political theories take so much more effort to be convincing.
No, I don't think if the US adopts a more progressive socialist economic model that all of a sudden, everyone will be driving Trabants, Ladas, or even Zil limousines. This is an absurd construct. Adopting a socialist economic model will not turn the US into the former Soviet Union. I doubt much would change outwardly. We would live much as we do now. The only difference is that there would be an element of economic fairness injected into the system. When NO ONE is unemployed, crime isn't a problem. When investments are made into infrastructure we ALL benefit. Why wouldn't ALL Americans want to live in cities with safer streets? This is nonsense, all I've heard from the chicken littles that the the sky is falling. Get real.

European nations have high incomes and good lifestyles with nationalized health care and worker protections that provide 5 week vacations. Those citizens don't have to directly pay for university education. There is no reason the US cannot follow this established successful model. The wreckage of capitalism is evident for all to see, its rotting carcass is on Wall St right now.
 

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Given the demonstrated failure of the capitalist model, perhaps now is the time to consider nationalization of the US North American Automotive Operations. A core industrial base is vital to the security and welfare of the United States. The socialist model has much to recommend it. The wretched excess of executive compensation can be reined in, and with Government universal single payer health care, major drags on industrial performance can be eliminated. Capitalism is a FAILURE!
 

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Discussion Starter · #8 · (Edited)
Given the demonstrated failure of the capitalist model, perhaps now is the time to consider nationalization of the US North American Automotive Operations. A core industrial base is vital to the security and welfare of the United States. The socialist model has much to recommend it. The wretched excess of executive compensation can be reined in, and with Government universal single payer health care, major drags on industrial performance can be eliminated. Capitalism is a FAILURE!
Haven't you posted this same post elsewhere before?

I'm just curious cause it seems very familiar...
 

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Discussion Starter · #9 ·
Here is another article on this from the Detroit News if anyone wants to give it a glance:

SOURCE: DetNews.com

Nissan seeks Chrysler stake
Ghosn's proposal: Chrysler would be partner with Renault-Nissan

Christine Tierney, Robert Snell and David Shepardson / The Detroit News

The Renault-Nissan alliance is proposing to acquire around 20 percent of Chrysler LLC and bring the Auburn Hills automaker into the French-Japanese automotive partnership, according to sources familiar with the situation.

The offer is now before private equity firm Cerberus Capital Management LP, which also is in talks with General Motors Corp. about its Chrysler holding.

Sources familiar with the discussions said Carlos Ghosn, CEO of both Renault SA and Nissan Motor Co., sent a proposal in recent days that included revisions to a draft agreement prepared by Cerberus.

The sources said Tokyo-based Nissan would acquire the stake because it has cash on hand, whereas Renault now has debts of more than $5 billion.

Nissan and Chrysler already have several joint projects in the works, with Nissan planning to produce small cars for Chrysler and Chrysler scheduled to make the next generation Titan full-size pickup for Nissan. Chrysler and Nissan managers say the teams work well together.

But another source close to the talks has told The Detroit News that Cerberus founder and CEO Stephen Feinberg favors a deal with GM, viewing it as the best solution for the embattled U.S. auto industry.

Under the scenarios being discussed with GM, the automaker might absorb its smaller rival or establish it as a subsidiary, with Cerberus expected to take a stake in the combined automotive entity. But these scenarios would require financing, which is hard to obtain in this economic environment.

"The key to any deal is the availability of financing to fund present cash burn rates and substantial merger costs," said Citi auto analyst Itay Michaeli.

He estimated that the combined entity would need at least $10 billion to $12 billion of fresh cash. "Attaining such financing could require Cerberus' participation and perhaps that of certain Chrysler bank debt holders," he said in a research note.

Citing "the significant execution risk and a checkered industry mergers and acquisition track record," he reiterated his sell rating on GM's stock.

Most industry experts say such a GM-Chrysler deal would lead to drastic job cuts at Chrysler because of the huge overlap between the two U.S. automakers' businesses.

Brands would be retained

By contrast, Detroit's smallest automaker would remain largely intact as a partner in the Renault-Nissan alliance.

It would participate in the joint purchasing, vehicle platform development and other programs, slashing its costs. But it would have its own management and retain its brands. There is little overlap among Renault, Nissan and Chrysler brands in most of the world.

The Renault-Nissan alliance was formed in 1999, when France's Renault SA acquired a controlling stake in then-struggling Nissan. Ghosn, then a senior executive at Renault, was dispatched to Japan, where he returned Nissan to profitability within a year.

He has expressed a wish for a long time to add a North American partner to the alliance.

But with the world's markets and economies struggling through a steep and potentially protracted downturn, many Renault and Nissan investors may resist Ghosn's plan to add a third, and troubled, member to the alliance. With sales tumbling in the United States and Europe, Renault and Nissan are straining, although they are still profitable.

Nissan had around $2.4 billion of net cash at the end of June but is committed to paying around $1.5 billion in dividends. Its investors were unhappy two years ago, when Renault-Nissan envisaged a three-way deal with GM.

Sources close to the talks say it is far from certain that Cerberus will conclude a deal with either Renault-Nissan or GM.

Cerberus, Renault and Nissan declined to comment. But the sources close to the talks say that GM and Cerberus are targeting a deal before the presidential election Nov. 4, when politicians may be more receptive to requests for federal aid to complete a merger.

Industry experts speculated on the dynamics of the parallel negotiations. "I don't know if Cerberus is playing GM off against Nissan-Renault," said Sean McAlinden, chief economist and vice president for research at the Center for Automotive Research in Ann Arbor.

Cerberus acquired 80.1 percent of Chrysler from then-DaimlerChrysler AG in August 2007 for $7.4 billion, most of which was injected into Chrysler. Cerberus is now in talks to acquire Daimler's remaining 19.9 percent stake.

Whether it concludes a deal with GM or Renault-Nissan, the New York-based private equity firm is unlikely to get money for Chrysler, analysts say, noting that Daimler essentially gave away the U.S. automaker that it had acquired in 1998.

Sales have fallen 25%

Now privately owned, Chrysler does not publish its financial results. But the automaker has suffered the sharpest sales drop of any major player in the U.S. market. Its sales have fallen 25 percent so far this year, twice the rate of the overall market's decline.

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if instead of buying chrysler, can GM and chrysler "merge" , form a new company and void all their union contracts?


Oh at that article above is such crap. Everyone knows Nissan will gut Chrysler just as fast as GM would. Has the press forgotten that Goshn only made it to where he is today by gutting everything and making everything lean and non-redundant. He'll fire as much as he can, and the move the rest to the new headquarters in tennessee for maximum efficiency. DUH!

perhaps if our government would lessen our biz tax rates (2nd highest in the world), GM and the rest might have a little breathing room...
 

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if instead of buying chrysler, can GM and chrysler "merge" , form a new company and void all their union contracts?


Oh at that article above is such crap. Everyone knows Nissan will gut Chrysler just as fast as GM would. Has the press forgotten that Goshn only made it to where he is today by gutting everything and making everything lean and non-redundant. He'll fire as much as he can, and the move the rest to the new headquarters in tennessee for maximum efficiency. DUH!

perhaps if our government would lessen our biz tax rates (2nd highest in the world), GM and the rest might have a little breathing room...

You get points for creativity, but Chrysler and GM can't get out of the union contracts that easily.

As for the business tax rate... try to think of it as MSRP on a car. No one pays MSRP. Almost no businesses pay the full business tax rate.
 

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if instead of buying chrysler, can GM and chrysler "merge" , form a new company and void all their union contracts?
No it can't.

GM is only considering this because it is very desperate. And it is very desperate because it is in a very bad place, financially. Nothing in this merger/buy-out is ideal. Far from it. GM is just trying to survive for a couple of years so it can make it through the bad economy, get its new product out, and actually benefit from those union contract savings.

GM will not make it to 2010 without some major cash coming from somewhere. The banks aren't lending, and no one wants to invest in GM. So it's Chrysler (with a lot of cash in the short term, but plenty of long term problems), some Kirk Kirkorian type (who will want quick profits and will mess up any turn around efforts going on), or bust. GM is picking its poison.
 

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Discussion Starter · #14 ·
I assure you all my remarks are extemporaneous. Perhaps you've confused me with someone else.
Must be deja vu then cause I could have sworn I've seen a similar statement on capitalism from you in the past.

Thanks for clearing it up.

Just as an aside though, is this a "new" perspective from you? By that I mean, did you just come to change your opinion on markets, the economy, etc or was this always the case? I ask because your screen-name is bmwboy2007 - and some would consider any BMW to be the ultimate expression of capitalism, no?

Take care my friend.
 

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No, I don't think if the US adopts a more progressive socialist economic model that all of a sudden, everyone will be driving Trabants, Ladas, or even Zil limousines. This is an absurd construct. Adopting a socialist economic model will not turn the US into the former Soviet Union. I doubt much would change outwardly. We would live much as we do now. The only difference is that there would be an element of economic fairness injected into the system. When NO ONE is unemployed, crime isn't a problem. When investments are made into infrastructure we ALL benefit. Why wouldn't ALL Americans want to live in cities with safer streets? This is nonsense, all I've heard from the chicken littles that the the sky is falling. Get real.

European nations have high incomes and good lifestyles with nationalized health care and worker protections that provide 5 week vacations. Those citizens don't have to directly pay for university education. There is no reason the US cannot follow this established successful model. The wreckage of capitalism is evident for all to see, its rotting carcass is on Wall St right now.
I refuse to give 1 cent to lazyass people who refuse to work for their livelihood.Want to go to college.......WORK FOR IT! Want to be employed at a good job........WORK FOR IT! Want vacation time.............WORK FOR IT! The only thing that socialism proves is how weak and frail the European community is and how they don't have the balls to stand up to REAL competition. The United States takes it's punches in stride and spits in the face of the opposition while the European community screams "Don't Hurt Me!" I know this is off topic but it had to be said.
 

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No, I don't think if the US adopts a more progressive socialist economic model that all of a sudden, everyone will be driving Trabants, Ladas, or even Zil limousines. This is an absurd construct. Adopting a socialist economic model will not turn the US into the former Soviet Union. I doubt much would change outwardly. We would live much as we do now. The only difference is that there would be an element of economic fairness injected into the system. When NO ONE is unemployed, crime isn't a problem. When investments are made into infrastructure we ALL benefit. Why wouldn't ALL Americans want to live in cities with safer streets? This is nonsense, all I've heard from the chicken littles that the the sky is falling. Get real.

European nations have high incomes and good lifestyles with nationalized health care and worker protections that provide 5 week vacations. Those citizens don't have to directly pay for university education. There is no reason the US cannot follow this established successful model. The wreckage of capitalism is evident for all to see, its rotting carcass is on Wall St right now.
1. When everyone has a job and there is no risk - many people stop working (they still go to their job and get paid - the just no longer try). That is what brought down the Soviet Union.

2. European nations are not socialist, Although they do have significantly higher "safety" nets. They also pay for that with much higher unemployement.
 

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...Why wouldn't ALL Americans want to live in cities with safer streets? This is nonsense, all I've heard from the chicken littles that the the sky is falling. Get real.

European nations have high incomes and good lifestyles with nationalized health care and worker protections that provide 5 week vacations. Those citizens don't have to directly pay for university education. There is no reason the US cannot follow this established successful model. The wreckage of capitalism is evident for all to see, its rotting carcass is on Wall St right now.
The former Soviet Union, East Germany, etc. had low crime rates because they were essentially *Police States*. As to organized crime, ever hear of the Russian Mob?

I do agree though that Socialism is much more equal; everyone is equally poor. Why do you think the former eastern bloc could not feed, cloth, or house itself? No individual person had an incentive to work. The State was supposed to take care of it all.
 

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Given the demonstrated failure of the capitalist model, perhaps now is the time to consider nationalization of the US North American Automotive Operations. A core industrial base is vital to the security and welfare of the United States. The socialist model has much to recommend it. The wretched excess of executive compensation can be reined in, and with Government universal single payer health care, major drags on industrial performance can be eliminated. Capitalism is a FAILURE!
Thanks for the morning laugh, I needed this.

Quite rich.

Capitalism, the most successful system developed currently underpinning all liberal democracies -- the US among them -- has failed according to your learned opinion. Man, that's just fantastic analysis.

Perhaps you'd like to point out successful socialist countries. I'm sure you'll point to Europe, but unfortunately the Western ones are liberal democracies with capitalistic underpinnings and the Eastern ones are slowly adopting a similar stance. Think not? I suppose IKEA is just a large social program. Or maybe Nokia is. And that Lego company isn't really a capitalistic company bent on defeating competitors and maximizing profits, nope, they're just a big, plush socialist program of the Danish government.

Ha ha ha ha. Man. I hope you post some more. I need these morning laughs before I head off to do my computer research.
 
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