GM’s problem, and possibly the whole reason they are searching for a partner, is GMAC. What is GMAC? GMAC Financial Services is a diversified, global financial services company that operates in approximately 40 countries in automotive finance, real estate finance, insurance and commercial finance businesses. With so many financial service companies in turmoil, it is no wonder that these talks could ultimately lead to a merger.
So, who could be leading these talks? Cerberus Capital Management, L.P. Who is that? They invest primarily in companies which are near bankruptcy. Cerberus owns around 80% of Chrysler, and 51% of GMAC when GM sold it to them on November 30, 2006. Owning the majority of both GM and Chrysler, it only makes sense that they would want to merge the two to maintain their investment return opportunity.
While all of this is still just talk, it certainly looms in the back of millions of those minds who are employed by either of these two auto giants. These employees need to be reassured, and only for one simple fact. The CEO’s are acting in the best interest of the employees and the companies, and NOT letting the government step in and socialize the auto industry.