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Report: GM in Talks to Buy Chrysler

<I>Automotive News</I> says high-level talks are taking place. DaimlerChrysler shares jump.

Automotive News

reported Friday that

General Motors

(GM) - Get General Motors Company (GM) Report

is in talks to buy Chrysler Group in its entirety from parent




The report, which cited sources in the U.S. and Germany, sent shares of DaimlerChrysler up $2.12, or 3%, to $72.37. GM shares were down 48 cents, or 1.3%, to $35.96.

GM spokeswoman Renee Rashid-Merem declined to comment on the story.

"We have discussions with other automakers on common interests, but those discussions often go nowhere," she said.

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Speculation surrounding Chrysler heated up Wednesday when its parent unveiled a sweeping restructuring plan for its struggling U.S.-based business, and the company also hinted it would

consider strategic options for the business.

Media reports quickly surfaced that Chrysler was in talks with GM, the world's largest automaker, about an alliance on manufacturing a new line of SUVs.


Automotive News

report Friday said that high-level talks are taking place between Chrysler and GM executives and that the potential deal would go beyond product development partnerships.

GM made headlines last year when it entered talks with Carlos Ghosn's


about a global alliance, but those negotiations broke down.

Any GM flirtation with Chrysler raises the prospect of a landmark deal that could transform the landscape of the auto industry as U.S. manufacturers struggle to keep pace with their lower-cost competitors.

The likelihood of such a complete buyout, however, is questionable given that GM is still struggling to gain its footing amid continued sales declines and a massive restructuring plan last year.