just want to point out the fact that Daimler-Benz bought (not "merged")
Chrysler Corp. for $32billion and is now dumping it for $4.5billion. I'm
just happy those tools get what they deserve.
Gabriel A. Couriel
2006 DML Fantasy Football Champion
-----Original Message-----
From: owner-dakota-truck@bent.twistedbits.net
[mailto:owner-dakota-truck@bent.twistedbits.net]On Behalf Of DAKSY
Sent: Monday, May 14, 2007 6:51 AM
To: Dakota Mailing List
Subject: DML: Here we go...
Hey, DML!
>From today's New York Times...
By MICHELINE MAYNARD and MARK LANDLER
Published: May 14, 2007
FRANKFURT, May 13 - DaimlerChrysler appears close to selling the struggling
Chrysler Group to a private equity firm that specializes in restructuring
troubled companies, unwinding a 1998 merger that was meant to create a
trans-Atlantic automotive powerhouse, people with direct knowledge of the
discussions said on Sunday.
An announcement could come as soon as Monday, though last minute details
could delay a final agreement between the investment firm, Cerberus Capital
Management, and Chrysler's parent, DaimlerChrysler, these people said. They
insisted on not being named because the talks were confidential.
The prospect of private ownership alarms Chrysler's labor unions, which have
come out strongly against the sale of the company, fearful that an investor
might try to break up the company or seek deep cuts in wages and benefits.
A sale of Chrysler to Cerberus "will shake the ground under people's feet in
a huge way," said Kevin Boyle, a professor at Ohio State University who has
written extensively about Detroit as the auto capital.
Under the terms of the deal being discussed, DaimlerChrysler would keep
about a 20 percent stake in Chrysler and would be freed from nearly $20
billion in pension and health care liabilities for Chrysler's current and
retired workers. The liability would be transferred to a new company
controlled by Cerberus.
The sale price was not clear, though executives said the primary value of
the deal was in the assumption of Chrysler's costs. As a result, little or
no money may change hands in the deal.
If the sale takes place, it would take apart a deal intended to create a
blueprint for the global automotive industry that sank under the difficulty
of putting a mass market brand, Chrysler, together with Mercedes-Benz, a
luxury company, while keeping both prosperous.
It would also be a watershed for private equity companies, which have become
audacious bidders for companies as varied as retailers, steel companies and
airlines in the last few years.
But never before has one of them purchased a company as iconic as Chrysler,
whose Dodge and Jeep brands are so embedded in the American culture that the
company's near-bankruptcy led to a federal bailout in 1979 that made Lee A.
Iacocca, then its chief executive, a household name.
With General Motors, Ford Motor and Chrysler all fighting big foreign
competitors like Toyota, "in some ways, the American automobile industry is
almost unrecognizable from what it was 25 or 30 years ago," Professor Boyle
said.
Among the issues still to be settled is the amount of investment capital
Cerberus will inject into the new Chrysler to finance its operations,
according to one executive.
"It is not yet a done deal, but it is heading the right way," a person
involved in the talks said on Sunday night. Another official with knowledge
of the talks said no agreement had been signed.
Daimler-Benz of Germany was an eager bidder for Chrysler nine years ago,
attracted by its highly profitable lineup of Jeeps and minivans. It paid $36
billion for Chrysler in what was originally portrayed as a merger of equals
but ended up being a German takeover.
The merger has never resulted in the savings or market power that its
creators envisioned, however. Chrysler's fortunes have been on a constant
roller-coaster ride, with profitable years followed by years of losses,
including a $1.5 billion loss in 2006, when Chrysler fell to fourth place in
the American market behind Toyota. (It had a 12.6 percent share of the
domestic market in 2006, from a peak of 16 percent in 1999.)
Meanwhile, Daimler's parallel expansion into Asia ran aground because of
troubles at its Japanese partner, Mitsubishi Motors. It thought Mitsubishi
might serve as the third leg of its global stool when it purchased a stake
in 1999. But Mitsubishi's legal and financial troubles forced Daimler to
take management control in 2002, and Daimler ended that alliance in 2004.
In February, DaimlerChrysler announced that it was keeping all of its
options open for Chrysler, including a sale or finding a partner to run the
company. At the same time, DaimlerChrysler announced a restructuring plan
for Chrysler, the second such plan in the last seven years.
Under the latest turnaround, which calls for the company to cut 16 percent
of its work force, or 13,000 jobs, Chrysler is not expected to be profitable
again until 2009. DaimlerChrysler, whose board is meeting early this week,
is scheduled to announce its first-quarter earnings on Tuesday.
Cerberus's Strategic Plan May Finally Be Paying Off (May 14, 2007)
Cerberus emerged as the leading bidder for Chrysler late last week, people
involved in the transaction said.
Along with Cerberus, other interested bidders in Chrysler included
Blackstone, which was exploring a purchase in conjunction with Centerbridge
Partners.
Magna International, the Canadian auto parts company, and the Tracinda
Corporation, the holding company owned by the billionaire Kirk Kerkorian,
also said they had made bids for Chrysler.
Officials at those companies said on Sunday night that they had not been
notified that Cerberus was the winner.
Over the last few days, officials at Cerberus and DaimlerChrysler have been
involved in detailed discussions, which have been shepherded by JPMorgan,
DaimlerChrysler's investment adviser.
Participants in the talks said on Sunday night that union leaders had been
informed of the discussions with Cerberus.
But Chrysler's unions, including the United Automobile Workers and the
Canadian Automobile Workers, have said they would prefer that Chrysler not
be sold. The U.A.W.'s president, Ron Gettelfinger, has a seat on the
supervisory board at DaimlerChrysler, which would have to approve any deal.
A deal with Cerberus "puts an enormous amount of pressure on the union,"
said David E. Cole, chairman of the Center for Automotive Research in Ann
Arbor, Mich.
The union thought private equity "would be the end of the world, and in some
ways it probably would be," Mr. Cole said. "The union is in a horrifying box
right now. There's got to be some real hardball that's a part of this to get
the rank and file to go along with it."
Cerberus, whose automotive investment operations are headed by David W.
Thursfield, a former executive with the Ford Motor Company, will probably
keep Chrysler's management in place, at least for now, people with knowledge
of the discussions said.
Chrysler's former president, Wolfgang Bernhard, who advised Cerberus, may
receive a seat on the board of the new Chrysler or play some other role.
Mr. Bernhard has visited Chrysler several times in the last few weeks, and
has remained friendly with DaimlerChrysler's chief executive, Dieter
Zetsche, who held that job at Chrysler when Mr. Bernhard was president
during the early 2000s.
A sale to Cerberus would mark the company's latest investment in an
automotive-related company. Last year, Cerberus, which owns the car-rental
companies National and Alamo, led a consortium that purchased a 51 percent
stake in the General Motors Acceptance Corporation, the financing arm of
General Motors.
Cerberus also reached a tentative agreement to purchase a controlling
interest in the Delphi Corporation, an auto parts supplier that used to be
owned by G.M. and is operating in bankruptcy. But that transaction stalled,
after Delphi and G.M. were unable to agree on contract terms with the U.A.W.
As private equity firms have appeared more often in the headlines, they have
also attracted scrutiny. Along with the unions, government officials have
expressed increasing concern over the financial restructurings that are the
lifeblood of buyout firms; their overhauls of companies have often included
massive cuts in jobs or benefits. In countries like Germany and France,
private equity firms have been derided as locusts that strip companies of
their assets.
Last month the Service Employees International Union, a politically active
organization that represents nearly two million workers, released a report
expressing public policy concerns about private equity. Among those were
questions about the lack of disclosure and about certain tax breaks for
buyout firms.
Nonetheless, DaimlerChrysler's shares have climbed 15 percent, to $82 on
Friday, since mid-February, when private equity firms entered the bidding
for Chrysler. At the company's raucous annual meeting in Berlin last month,
a succession of shareholders stood up to demand that the company move
swiftly to dispose of Chrysler.
"This marriage made in heaven turned out to be a complete failure," said
Hans-Richard Schmitz, who represented the German Association for the
Protection of Shareholders. "What's missing now is a swift resolution of the
issue by the management of the group."
This week, the shareholders may get their wish.
Bob (DAKSY) Smith
DAKSY2K on AIM
2K SY Dakota Sport +
V-6 4 x 4 5 speed
2K05 HD 883C YP
http://home.nycap.rr.com/daksy/
Averill Park, NY
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