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Thread: Nissan says "no, thanks!" to Chrysler

  1. #1
    Vulture of The Western World Eric's Avatar
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    Nissan says "no, thanks!" to Chrysler

    Nissan Motor Co., Japan's third- largest carmaker, isn't willing to put up cash for an alliance with Cerberus Capital Management LP's Chrysler LLC, according to two people with knowledge of the matter.

    Nissan, with 453.8 billion yen ($4.6 billion) in cash, won't consider a tie-up that weakens its financial position, said one of the people, who asked not asked not to be identified because talks between the companies are confidential.

    ``Any deal that used Nissan's cash would be viewed negatively as increasing risk, at a time when they should be reducing it,'' said Michael Tyndall, a London-based analyst with Nomura Securities, which has a ``neutral'' rating on Nissan. ``A share-swap certainly seems to be one option.''

    While Nissan is profitable, it might be forced to tap its reserves should a global recession crimp sales. Tokyo-based Nissan offered to acquire 20 percent of Chrysler and bring the U.S. automaker into its alliance with Renault SA, the Detroit News reported yesterday.

    Cerberus, already said to be in talks with General Motors Corp., has been exchanging proposals with Nissan, a third person familiar with the negotiations said today. Chrysler had $11.7 billion in cash as of June 30, which the company is using to cover operating losses.

    Nissan fell 34 yen, or 6.8 percent, to 466 yen in Tokyo trading after the Japanese currency rose against the euro and the dollar, cutting the value of overseas sales. Renault fell as much 2.52 euros, or 9.2 percent, to 24.82 euros and was 7.1 percent lower at 12:31 p.m. in Paris.

    Chrysler and Nissan agreed this year to build pickups and small cars for each other and said the partnership may expand. Simon Sproule, a Nissan spokesman in Tokyo, declined to comment and Lori McTavish at Auburn Hills, Michigan-based Chrysler said the company doesn't discuss private business meetings. Renault's Frederique Le Greves said the French carmaker wasn't in talks with Chrysler.

    Deutsche Bank estimates that a 20 percent Chrysler stake would be worth as much as $150 million, an outlay that would not be ``material to Nissan'' even if it did pay cash, Tokyo-based analyst Kurt Sanger said today.

    In a note reiterating his ``hold'' recommendation on Nissan, Sanger said potential cost savings with U.S.-focused Chrysler would be far short of the ``global procurement benefits'' Renault-Nissan could achieve in a tie-up with GM.

    Carlos Ghosn, chief executive officer at both Nissan and Renault, failed to persuade Detroit-based GM, the biggest U.S. carmaker, to join the alliance in 2006 and said on Oct. 2 that he was still seeking an American partner.

    Ghosn also declined to reiterate sales and earnings targets for Renault and said missing them in an auto-market slump shouldn't put his job on the line. Renault has pledged to give an update on full-year targets when it publishes third-quarter revenue later today.

    Under the system of crossed shareholdings underpinning their alliance, Boulogne-Billancourt, France-based Renault owns 44 percent of Nissan, and Nissan owns 15 percent of Renault.

    Cerberus, a New York-based buyout firm, may yet seek new talks with other automakers about Chrysler and is open to several merger or alliance scenarios, one of the people familiar with the negotiations said today.

    Cerberus wants to keep a Chrysler stake in any merger and is willing to contribute cash to a new company, people have said. GM is pushing for an agreement this month, people familiar with those negotiations said today, adding that the automaker remains the preferred partner for Cerberus and that talks are progressing. Chris Preuss, a GM spokesman, declined to comment.

    Standard & Poor's predicts that Chrysler and GM may run out of cash in 2009 as dwindling demand pushes U.S. auto-industry sales to the lowest since 1991.

    Chrysler's cash included $2.3 billion in restricted funds as of June 30, according to an Aug. 1 statement by the automaker, which isn't required to report financial information. GM has lost almost $70 billion since posting its last annual profit in 2004.


  2. #2
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    Re: Nissan says "no, thanks!" to Chrysler

    Chrysler: Dead car walking.

    What saved them in the 80's was their people. Folk like Lee Iacocca (who was able to sell an unsuspecting American public the K-car, but we won't go into that!)

    But since Daimler cleaned house prior to the purchase by Cerberus, Chrysler no longer has the people with the talent to pull them out of this pit.

    Chip H.

    Former owner: 2012 Honda Civic LX, 2006 Honda Ridgeline RTL, 2000 Honda CR-V EX, 2003 MINI Cooper S, 1992 Honda Accord LX, 1999 Mercedes ML-320, 1995 VW Jetta GLX, 1991 Mercury Capri XR2, 1981 Mercury Zephyr, 1975 Chevrolet Impala

  3. #3
    Vulture of The Western World Eric's Avatar
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    Re: Nissan says "no, thanks!" to Chrysler

    Quote Originally Posted by chiph
    Chrysler: Dead car walking.

    What saved them in the 80's was their people. Folk like Lee Iacocca (who was able to sell an unsuspecting American public the K-car, but we won't go into that!)

    But since Daimler cleaned house prior to the purchase by Cerberus, Chrysler no longer has the people with the talent to pull them out of this pit.

    Chip H.
    Add to that no cash reserves to weather the storm - and a product lineup full of cars that are outdated or unwanted....


    RIP...

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    Re: Nissan says "no, thanks!" to Chrysler

    I probably need to borrow a copy of Iacocca's biography. I'm curious if the K-Car was already under development when they went to Congress and asked for the loan, or if it's something they threw together from off-the-shelf parts.

    One thing about the K-Car marketing campaign was that it stressed that it was made in America, by Americans. I don't think they could honestly say/do the same thing today.

    Chip H.

    Former owner: 2012 Honda Civic LX, 2006 Honda Ridgeline RTL, 2000 Honda CR-V EX, 2003 MINI Cooper S, 1992 Honda Accord LX, 1999 Mercedes ML-320, 1995 VW Jetta GLX, 1991 Mercury Capri XR2, 1981 Mercury Zephyr, 1975 Chevrolet Impala

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    Senior Member misterdecibel's Avatar
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    Re: Nissan says "no, thanks!" to Chrysler

    I guess the strategy now is to wait for them to fail outright, then people will swoop in to pick up whatever pieces (Jeep) are left that still have any value.

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