• The New York Times, The Detroit News, The Wall Street Journal, Detroit Free Press, Friday, October 17, 2008 12:30 PM

When we last left the report of merger talks between General Motors and Chrysler, it seemed that the naysayers -- mostly analysts on the sidelines -- had the upper hand. In short, brands overlap. But this morning brings news that the principals involved don't think it's such a bad idea after all and they're furiously talking -- not that a potential deal is being driven by any motive other than financial desperation. GM needs cash and Chrysler has it.

The headline on the print edition of the Times is "GM Teeters Toward Merger." Indeed, in a commentary about any possible deal in The Detroit News, Ray Windecker says that a pal of his describes the talks as "two drunks leaning on each other." Windecker, a former Ford analyst and Studebaker -- yes, Studebaker -- sales and marketing manager, suggests: "What is missed is what happens when the less inebriated drunk picks the pocket of his partner."

Windecker then draws an analogy to the 1950s when Packard and Studebaker merged. He says if a merger happens, GM should kill all Chrysler vehicles except Jeeps and minivans, rebadging viable Pontiacs as Dodges, Buicks as Chryslers and GMCs as Rams.

I'm not sure I follow the analogy completely; the bottom line to me is that neither Packard nor Studebaker had nameplates in showrooms after 1963. But Windecker's point is that "GM is more decisive than Studebaker" and wants to remain in the automotive business while Cerberus is looking for an exit strategy.

Let's get back to the Times, which takes credit for first breaking news of the merger talks a week ago. Its Web site headline -- "GM Merger Talks With Chrysler Said To Intensify" -- is decidedly more sober than the print version, but the curious lede remains the same: "Rick Wagoner is running short of time and options to save General Motors and salvage his legacy as leader of the world's biggest automaker."

Is this really all about salvaging the brand known as Rick Wagoner?

Further down, the story points out that the deepening financial crisis threatens to torpedo the methodical turnaround plan Wagoner put into motion three years ago. "As the leader of the industry's biggest player, Mr. Wagoner has become the focal point for what's gone wrong in Detroit," it says.

Meanwhile, The Wall Street Journal reports that major banks that lend to both companies, such as J.P. Morgan Chase, are also "keen to do a deal," suggesting that one could happen by the end of the month. But some members of GM's board of directors remain skeptical about a deal with Chrysler. "It is also unclear whether a key element of the talks -- swapping Chrysler for GM's 49% stake in GMAC LLC -- will happen," it says.

Sources tell the Detroit Free Press that a merger is Cerberus' preferred solution for Chrysler, where U.S. sales have dropped 25% so far this year. But there could be other partners for Chrysler, such as Renault-Nissan. Chrysler and Nissan already have an agreement to build some vehicles for each other and Chrysler is building minivans for Volkswagen.

Neither Cerberus nor GM is making public statements about the talks .

Read the whole story at The New York Times, The Detroit News, The Wall Street Journal, Detroit Free Press »