Credit Woes Stall GM's Effort to Buy Chrysler

A tight credit market is making it tougher for GM to scrape cash together for offer
By Jim O'Neill,  Newser User
Posted Oct 20, 2008 6:59 AM CDT
General Motors Chairman and CEO Rick Wagoner.   (AP Photo/Paul Sancya)
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(Newser) – A tight credit market and wary investors are slowing GM’s attempts to buy rival Chrysler, and experts say the companies may turn to the US government, arguing that a deal between the two is needed to save the US auto industry, reports the Wall Street Journal. But sources told the Journal a deal between the automakers remains far from done and called talks “tenuous.”

GM is using up its already-thin cash reserves at the rate of $1 billion a month, and hopes a deal with Chrysler owner Cerberus would give it a much-needed cash infusion. A merger would save billions of dollars through cost-cutting, says GM, though those measures could slash as many as 40,000 jobs. The combined company would own 30% of the US auto market.