South Korea's Hyundai Motor Co. has had talks with Chrysler LLC owner Cerberus Capital Management LP about a potential acquisition of the U.S. automaker's Jeep brand and possibly other assets, people with knowledge of the talks told Reuters.
The emergence of Korea's largest automaker as a potential bidder for at least part of Chrysler comes a day after General Motors said it shelved its own pursuit of an acquisition of its cross-town rival.
Cerberus also plans to restart talks with other potential partners for Chrysler, including Renault-Nissan, the sources said.
Hyundai has expressed interest in Chrysler's Jeep brand, but Cerberus would prefer to sell all of Chrysler rather than split off assets through a series of deals that would break up the company, the sources said.
Cerberus, Chrysler and Hyundai declined to comment.
Jeep is considered Chrysler's most valuable asset. Although Chrysler has been readying a step that would allow it to sell off Jeep and its supporting parts business readily, any move to dispose of the brand would signal the end of Chrysler as a stand-alone automaker, sources said.
The talks over the future of Chrysler are playing out just as the U.S. auto industry makes its case to U.S. lawmakers for a rescue package for GM, Ford Motor Co. and Chrysler at a time when all three are burning cash faster than ever.
GM, which had been seen as the leading candidate to buy Chrysler, said on Friday that it set aside its pursuit of the acquisition in order to focus on preserving cash.
Bush administration officials last week rebuffed a request for some $10 billion for GM to fund its proposed merger with Chrysler in part, out of concern for the tens of thousands of jobs that would be lost as a result, sources have said.
One advantage of a Hyundai bid is that the Korean automaker would likely opt to preserve more of Chrysler's U.S. operations, and hence keep more jobs, the sources said.
That aspect of the deal could be important because Democratic lawmakers who extended their majority in Congress in Tuesday's election have made it clear that any federal rescue package would be aimed at preserving U.S. manufacturing jobs.
The auto industry and its political allies, including the UAW, are pressing for the current Congress to take up a proposal for another $50 billion low-cost loans for the cash-strapped sector later this month.
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