Chrysler Cancels Talks With Renault-Nissan On Partial Takeover

November 2, 2008 6:37 a.m. EST

Detroit, MI (AHN) - Cerberus Capital Management LP, owner of Chrysler, has cancelled talks on a possible partial takeover offer by Renault-Nissan.

The Detroit News reported, citing sources privy to deal, that Cerberus favors General Motors Corp. as a partner. A deal between GM and Chrysler would be financially viable and do more for the U.S. auto industry, the report said.

Renault-Nissan plans to acquire a 20 percent stake in Chrysler, while GM is looking at a merger. Chrysler was reportedly losing money.

GM might buy Chrysler if financing could be arranged. GM has been burning cash through its reserves, and is looking at low-interest government loans for a merger with Chrysler.

Automakers are struggling with dropping sales and a potential cash shortfall.