GM Seeks Capital from Outside Investors

NEW YORK (Reuters) – General Motors (GM.N: Quote, Profile, Research, Stock Buzz) is looking for a large investment from outside investors as a possible alternative to a deal with Chrysler LLC, the Financial Times reported on its website on Tuesday.

The hoped for capital injection would be similar to recent investments by billionaire investor Warren Buffett in General Electric (GE.N: Quote, Profile, Research, Stock Buzz) and Goldman Sachs (GS.N: Quote, Profile, Research, Stock Buzz), the paper said.

But the paper cited an unnamed banker as questioning the chances of GM finding an investor to do so.

A GM spokesman could not be reached immediately.

U.S. auto sales have slid to 15-year lows this year and are expected to drop further in October, as credit tightens for consumers. GM’s sales were off 18 percent through September. Chrysler’s sales fell 25 percent.

In a sign of the pressure on the industry, GM and Chrysler are in merger talks in an attempt to shore up cash and survive the industry slump, sources familiar with the plans have said.

A source briefed on the matter has told Reuters that representatives of GM and Chrysler’s majority owner Cerberus Capital Management [CBS.UL] have approached at least one major investor with a pitch to invest in their deal.

But the pitch for a capital injection for a merged automaker that would control about a third of the U.S. light-vehicle market was met with “a great degree of apprehension,” the source said.

Cerberus has also had talks with Renault-Nissan, the joint venture of the French (RENA.PA: Quote, Profile, Research, Stock Buzz) and Japanese (7201.T: Quote, Profile, Research, Stock Buzz) carmakers, on its interest in Chrysler, sources have said. (For more M&A news and our DealZone blog, go to www.reuters.com/deals)