Merrill analyst gives Chrysler deal 50% chance

[NYCshopper]

Merrill analyst gives Chrysler deal 50% chance

http://www.freep.com/apps/pbcs.dll/a...ESS01/70220026

General Motors Corp. could be eyeing a deal to buy the Chrysler Group as a way to increase its bargaining power with the UAW and hold off competition in the United States, according to an investors’ note by a leading Wall Street auto analyst.

Merrill Lynch analyst John Murphy issued a note Tuesday rating the chances of a GM tie-up with Chrysler at 50-50. Talk of a Chrysler Group sale started last week when DaimlerChrysler AG Chairman Dieter Zetsche said he would not rule out any options for the Chrysler Group.

"News reports of GM's possible bid for Chrysler are everywhere and seem a bit of a stretch,” Murphy wrote. “However, given the transformation the U.S. industry is beginning, we would not rule out a tie-up. Most importantly, GM may view the acquisition as a defensive maneuver to box out new competition."

GM could gain an advantage in jointly developing trucks with the Chrysler Group and also in its ability to negotiate with the UAW, the note said.

“Possible synergies include leverage with the UAW, platform sharing in trucks, and leveraging legacy assets,” Murphy said. “On the other hand, the hurdles of excess dealers and dubious outcome of past auto combinations are high. On balance, we don't view the combination as overly compelling on its own merits, but it may be an important strategic move for GM.”

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