Cerberus Capital Management LC now has a second serious offer to consider for divesting itself of Chrysler LLC. The Renault- Nissan alliance headed by CEO Carlos Ghosn has proposed to acquire 20 percent of Chrysler using Nissan’s cash on hand, likely between $10 and $12 billion. Ghosn’s proposal would keep the Chrysler, Dodge and Jeep brands alive – unlike what most analysts predict would happen should General Motors acquire Chrysler LLC.
Japan-based Nissan would actually own 20 percent of Chrysler under the deal because it has the money reserves to make the purchase. Once cash-flush Renault is now about $5 billion in debt, though despite turmoil in the industry, things are generally looking up for the French automaker.
Renault- Nissan says that Chrysler would serve as a partner in the alliance with minimal job losses. The French-Japanese partnership says that it would retain Chrysler’s three brands in North America as it looks to expand purchasing, joint vehicle development and distribution.
Many Nissan investors opposed the 2006 plan to acquire a stake in General Motors and it’s unclear how they’ll feel about Nissan getting involved with Chrysler. Ever since Ghosn – a former Renault executive – was sent to Japan to turn around Nissan, he has expressed interest in a full partnership with a Detroit automaker. It appears that now that Ghosn may be Chrysler’s last chance for survival.
Nissan and Chrysler are no strangers. The two automakers are working on several joint projects, including a plan for small Nissan-developed, Chrysler-badged cars and a Dodge -developed, Nissan-badged Titan pickup replacement.
Chrysler and Renault are hardly strangers, either, given that Chrysler purchased American Motors Corporation (including Jeep ) from a Renault-AMC partnership in 1987.
Cerberus CEO Stephen Feinberg is said to still be in favor of turning over full control of Chrysler to GM, however. According to the Detroit News, Feinberg thinks it would be the best solution overall for the auto industry. Still, it’s impossible to ignore that full GM control would release Cerberus from Chrysler LLC entirely – a major benefit for Feinberg but not for Chrysler employees whose jobs would be cut or the historic brands.
Or, in the eyes of many analysts, for General Motors, which is coping with its own struggles to downsize.
