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CNBC has learned that General Motors [GM
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] and Cerberus Capital Management have resolved the major issues in a proposed GM-Chrysler merger. “Its all but a done deal,” says CNBC’s Auto Industry reporter Phil LeBeau on Fast Money. All that’s left now is financing.
The lending consortium—which includes JPMorgan Chase [JPM
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], Goldman Sachs [GS
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], Citigroup [C
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] and Morgan Stanley [MS
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]—has not made a decision yet, and talks are complicated because lenders have sold part of the debt to other investor groups, explains LeBeau.
A NEW CEO?
Who will lead the combined automaker? “Let me spare you from wondering,” writes LeBeau in his CNBC blog Behind The Wheel. It will be GM CEO Rick Wagoner.
And will he get government financing? “He'll get it,” LeBeau says.
“Washington doesn't have much of a choice but to give GM the money. If it doesn't, there is a very real possibility Chrysler and GM could slide toward bankruptcy. That ultimately would be even worse than spending $5-10 billion now,” says LeBeau.
Layoffs Ahead
Unfortunately, the merger comes at a price; jobs. “Lawmakers will publicly proclaim everything must be done to limit the loss of jobs caused by a merger, but they know thousands will lose their jobs and that most of them will be lost at Chrysler,” says LeBeau.
The bottom line: GM and Chrysler will likely merge and the government will probably provide financing.
What do you think? Tell us now
Read More:
> GM's Wagoner: He'll Get What He Needs From Washington
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Trader disclosure: On Oct.29 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami Owns (AGU), (BTU), (C), (GS), (INTC), (MSFT), (NUE); Macke Owns (MSFT), (WMT), (MCD), (SDS), (UUP); Najarian Owns (BNI) Put Spread; Najarian Owns (INTC) And Is Short (INTC) Calls; Najarian Owns (MS) And Is Short (MS) Calls; Najarian Owns (PBR); Najarian Owns (MSFT) And Is Short (MSFT) Calls; Seymour Owns (AAPL), (BAC), (F), (MER)
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