Whats Next for Ford and GM – Merger and Acquisition

General Motors Corp. said Friday that bankruptcy is not an option being considered despite the “unprecedented challenges” posed by a weakening economy.“Bankruptcy would not be in the interests of our employees, stockholders, suppliers or customers, and we believe speculation about a possible filing is exaggerated and nonconstructive,” a GM spokesman said.

Instead GM is in talks with Chrysler for a possible merger.  General Motors Corp., Chrysler LLC and Cerberus Capital Management LP have held preliminary talks about a merger or an acquisition of Chrysler by GM.

Ford  sold Jaguar and Land Rover earlier this year to Tata Motors for 1.15 billion , and according to sources Tata Motors might also be buying a stake in Mazda Motor Corp. 

The auto industry has been hit hard in recent weeks by the effects of the credit crisis, prompting GM and Ford to issue statements Friday to dispel the notion that they might be headed for bankruptcy. GM and Ford shares were battered with the rest of the stock market this week, falling to lows not seen in decades.

Ford shares have plunged  to a 26-year low at $1.99 and its U.S. rival General Motors Corp to a nearly 60-year low to $4.89