DETROIT -- General Motors Corp. is not actively pursuing a purchase of the Chrysler Group after talking in January about a potential transaction, people familiar with the talks say.
People close to the talks told the Detroit Free Press that they don't expect GM to be in the running to buy Chrysler because privateequity firms are expected to offer more. And, they said, GM hasn't budged from its initial position.
Just moments after DaimlerChrysler Chairman Dieter Zetsche announced Feb. 14 that all options were on the table for Chrysler Group, including selling it, speculation jumped to a possible alliance with GM.
Sources confirmed that GM had conversations beginning last fall with DaimlerChrysler about a potential deal but said there have been no talks of late.
GM officials do not expect to end up owning Chrysler and have no plans to chase after it because the risks are too high, according to people familiar with the proceedings.
In fact, they said calling the discussions an "offer" was a stretch.
Reportedly, Canadian parts-supplier Magna International Inc. and an unnamed private equity firm have teamed up in a bid for Chrysler worth between $4.6 billion and $4.7 billion.
Separate bids from private equity firms Blackstone Group and Cerberus Capital Management are expected this week.
However, DaimlerChrysler has worked in recent days to dampen speculation that it will announce a sale at the shareholders meeting April 4 in Berlin.
In January, GM discussed the conditions for a deal and never budged from that position, people close to the situation said.
GM would be willing to take control of Chrysler if DaimlerChrysler would help fund Chrysler employees' future health care costs. In exchange, DaimlerChrysler would get a stake in GM of less than 10 percent.
GM and Chrysler have also discussed the possibility of working together on certain vehicles, such as SUVs and minivans. This month, Zetsche said GM raised the idea of building vehicles together.
Spokesmen for GM and Chrysler declined to comment yesterday.
The first round of bidding for Chrysler is expected to be complete this week and a second round could go into the summer months, the Financial Times in London reported.
While the report, mentioning unnamed sources, said a deal could be wrapped up as early as the end of April, it added that the talks could drag into the summer or possibly the fall.
The newspaper said DaimlerChrysler's financial adviser, JPMorgan Chase, has asked for initial offers to be submitted by the end of the month, including a price and business plan for Chrysler.
Canadian and U.S. auto union leaders plan to meet early next week in Berlin with their European counterparts to consider their next step. Union leaders have expressed concerns about a sale of Chrysler.
Buzz Hargrove, president of the CAW, voiced doubt about a GM-Chrysler deal.
"I think it is highly unlikely," Hargrove said yesterday. "Matter of fact, I don't think it is even remotely possible. I don't see any advantages for GM in buying ... Chrysler when they both have major challenges."
German shareholders, however, have been vocal against Chrysler, which lost $1.5 billion last year, and the stock market has reacted enthusiastically to the idea of a Chrysler sale, sending DaimlerChrysler shares soaring.
Peter Nesvold, an analyst with Bear, Stearns & Co. Inc., said yesterday that the price of GM's stock has been held down in part by the speculation that the company is considering a Chrysler purchase.
In a note to investors, Nesvold said GM's share price would rise if it becomes clear that someone else is going to buy Chrysler.
Other analysts have questioned the idea of a GM-Chrysler alliance, saying GM has its hands full with its own turnaround plan.
GM lost $2.2 billion last year - a significant improvement from a $10.4 billion loss in 2005 - but it's still spending money faster than it makes it, and its executives caution that there is a lot of work to do to stabilize the automotive giant.