GM: Report of Chrysler Merger Talks Untrue - TheStreet

Updated from 12:56 a.m. EST

DETROIT --

General Motors

says a report that it and

Chrysler

have restarted talks to combine the two ailing automakers is untrue, the

Associated Press

reports.

Spokesman Tony Cervone says GM's stance on the merger talks hasn't changed since it suspended them when it announced third-quarter earnings in November,

AP

reports.

The Wall Street Journal

reported Thursday that GM and Chrysler have reopened merger talks, as Chrysler owner Cerberus Capital signaled its willingness to give away part of its ownership in the automaker.

Because cash is running low at both companies, Cerberus took the initiative to restart discussions that sputtered just weeks ago, the

Journal

reports, citing people familiar with the discussions.

The

Journal

reports the renewal of the talks could be a way for Cerberus to show the U.S. government -- which is weighing a $14 billion rescue package for the auto industry -- that it wants to cooperate in restructuring the industry. And it could offer Cerberus a way to protect its stakes in two distressed auto-finance companies, GMAC LLC and Chrysler Financial, which are crucial to the survival of the Detroit automakers.

Earlier this month, Congress pressed Cerberus to inject fresh capital into Chrysler as part of any rescue plan. So far Cerberus has rejected the idea, saying shareholders of GM and

Ford

(F) - Get Report

aren't being asked to contribute more capital, and that its investment charter prohibits such a move, according to the newspaper.

One way in which Cerberus might make concessions, however, could be to give away some of its principals' stakes in Chrysler as part of a broader restructuring. That could mean giving a future government auto czar discretion to distribute Cerberus' stake to the United Auto Workers union or even to GM, the

Journal

says.

According to a person familiar with the GM-Chrysler talks, Cerberus is eager to make concessions in order to arrange a combination of Chrysler's finance arm with that of GM, the

Journal

reports. In order to get that achieved, Cerberus feels it has to be flexible on the use of its ownership stake in Chrysler, the

Journal

reports.

This article was written by a staff member of TheStreet.com.