Chrysler in talks with Renault, Magna: sources

By Poornima Gupta, Soyoung Kim and Kevin Krolicki

DETROIT (Reuters) - Chrysler is in talks to sell key assets to Renault-Nissan and auto supplier Magna as it rushes to restructure after taking $4 billion in U.S. government loans, according to people with knowledge of the discussions.

The string of potential deals would deepen ties between Chrysler LLC and two of its key current partners but could also mark the end of the struggling No. 3 U.S. automaker as an independent venture.

Renault-Nissan and Chrysler, which is owned by Cerberus Capital Management, had some contact about a sale of all or parts of the U.S. automaker last year before the U.S. government stepped in to bail out Chrysler and General Motors Corp in December.

The present round of talks with Renault-Nissan gathered momentum in recent weeks and has included discussions about a deal to sell Chrysler's iconic Jeep brand, according to three people with knowledge of the talks.

Renault-Nissan, an alliance headed by Carlos Ghosn, has been looking to clarify whether a deal to acquire assets from Chrysler would jeopardize the company's access to U.S. government funding, one of those familiar with the talks said.

Representatives of Chrysler, Cerberus, Magna and Nissan had no comment. Renault, which owns a controlling 44 percent stake in Nissan, could not be immediately reached for comment.

Chrysler Chief Executive Bob Nardelli said this week that he was not preparing the struggling automaker for sale.

Ghosn has repeatedly said he would not consider a deal that would involve spending cash in an uncertain market.

Chrysler has also discussed selling its assembly plant in Belvidere, Illinois, to Canadian auto supplier Magna in exchange for long-term production contracts, according to the three people familiar with the automaker's talks.

In a separate set of deals, Chrysler is also looking to sell the tooling and other assets related to its PT Cruiser model, the three said.

Sen. Bob Corker, a Tennessee Republican who has been one of the auto industry's most outspoken critics in Washington, said on Tuesday that Chrysler could be made more viable by merging with a larger automaker.

"They probably would be better if they were attached to a larger platform," Corker said as he toured the Detroit auto show.

Corker, whose home state includes the North American headquarters of Nissan and one of the Japanese automaker's assembly plants, met on Tuesday with representatives of U.S. automakers, including Chrysler.

Chrysler was given $4 billion in U.S. government loans earlier this month and has said it plans to ask for another $3 billion in funding to head off a cash crisis.

Chrysler's U.S. sales dropped 30 percent last year and it burned through more than $9 billion in the last six months of the year to end 2008 with around $2 billion in cash.