Cerberus wants to keep GM management if merger happens

According to a person familiar with the discussions, Cerberus isn’t seeking the replacement of current General Motors top executives, including CEO Rick Wagoner. With eight years on the job, Wagoner is the longest-serving chief executive at a U.S. automaker. There was no comment on a role for Chrysler CEO Bob Nardelli.

The source, who requested anonymity, also said Cerberus wants a “meaningful” stake in the merger, but is not looking for a majority holding. Negotiations to date haven’t covered Cerberus having a representative on the new company’s board of directors.

Chrysler said yesterday it would eliminate 25 percent of its salaried workforce, or about 4,300 jobs, by the end of the year and trim capital spending. However, today’s edition of the Detroit News reports the cuts will be closer to a third of the staff, or about 5,000 positions. Chrysler left the door open to additional cuts, saying more restructuring actions will be taken in the near future.

Analysts are questioning the benefits of a GM-Chrysler merger. They believe the marriage could drag down both companies before they could realize any long-term savings.

In an October 20 note to investors, Citigroup Global Markets analyst Itay Michaeli says the merged companies would need $10 billion to $12 billion in fresh cash to make the deal work. Cerberus may contribute some of that, people familiar with the negotiations have said, and both companies have been trying to attract outside investment.

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