Hurm. (Domestic) automotive madness

[mr_teem]

There are a whole flurry of reports, following disappointing results from the Chrysler and DaimlerChrysler announcing layoffs, that GM is in talks to purchase the Chrysler division from DaimlerChrysler. Other reports just say that there's an alliance being discussed over possibly sharing power trains and other components, which has happened many

Comments

[dirkcjelli]

Why would one company with huge pension obligations pick up another one? (The cool design team has left, too.) Probably just overimaginative speculation in the automotive press.

Like a butterfly, to merge in such a fashion that they can take all the profitable parts of the company and spin them off into a car company without pension liabilities that has the IP they want... while allowing the Pension crystalis to go bankrupt.

Their exit strategy is "Delphi again".

[mr_teem]

GM still had obligations (50%, I think) to fund Delphi's pension/retirement obligations, but I see your point.

But this kind of merger wouldn't result in an obvious chunk, like the parts business, to be spun off. You could design a new holding company to contain one company that owned all the obligations and the other doing the new manufacturing, but if the shareholders didn't spot that, the SEC would.

Of course, there might need to be some kind of precipitating event like this to get people's attention focused on the Pension Benefit Guaranty Corporation and it's problems.

[glenmarshall]

Why would one company with huge pension obligations pick up another one?

To consolidate the obligation so they can efficiently disavow it and too it into the federal government's lap to deal with.

[mr_teem]

GM could do that now. (It's what my Dad and his fellow retirees live in fear of every day.)

They don't need to pick up Chrysler to do it. Kerkorian bailed out late last year, which I also take as a sign that the board isn't going to look at an acquisition like that. (Or maybe they did, and rejected it, which would be reason enough for him to bail out.)

[mr_teem]

Blah. Leaky brain. I forgot that the Nissan/Renault deal was Kerkorian's baby and that's why he bailed out when it fell though. (But there might have been a Chrysler deal he was pushing, too.)