Chrysler, GM have merger talks: Sources

Chrysler LLC has had talks with General Motors Corp about a deal to combine the No 1 and No 3 American automakers at a time when both are struggling to cut costs and shore up cash, according to three people familiar with the matter.

Talks between Chrysler's majority owner, Cerberus Capital Management LP, and GM began several weeks ago and were initiated by the private equity fund, according to the people familiar with the talks, who spoke on condition of anonymity.

But the talks got hung up on the question of how to value Chrysler's loss-making auto operations, which include the Chrysler, Dodge and Jeep brands, two of the sources said.