Buyout firm meets with Chrysler

Buyout firm meets with Chrysler
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Buyout experts from Cerberus Capital Management met Monday with Chrysler
Group executives to evaluate a possible bid for the troubled U.S. division
of DaimlerChrysler AG, according to people close to the situation.

Cerberus, a leading private-equity firm, is the first Wall Street investor
to visit Chrysler headquarters in Auburn Hills for an in-depth review of the
automaker's finances and operations.

A second private-equity powerhouse, the Blackstone Group, is scheduled to
meet one on one with Chrysler management later this week, people familiar
with the matter told The Detroit News.

The meetings suggest that the sale process for Chrysler is entering a
critical phase, as big-money investors begin to dig deep into the prospects
of purchasing the one-time No. 3 U.S. automaker.

Chrysler was essentially put up for sale Feb. 14 when DaimlerChrysler CEO
Dieter Zetsche announced that "all options" were being considered for the
struggling automotive icon.

Seperately, Monday, Zetsche said he does not rule out selling Chrysler
Financial, the finance arm of Chrysler, as it considers all options for the
U.S. division.

"In case we would decide for an option that would change the current
structure for the Chrysler Group, we have the option to do the same for the
financial arm or not," he said during a Merrill Lynch Global Automotive
Conference in Geneva, broadcast on the Internet.

Cerberus and Blackstone could be joined in a bidding war by other investment
groups as well as General Motors Corp, which has been in discussions about
acquiring Chrysler since December.

A spokesman for Cerberus in New York declined comment Monday about the
on-site visit at Chrysler. "We routinely don't comment on market rumors and
speculation," said Peter Duda of Cerberus.

Chrysler spokesman Jason Vines also declined to comment Monday.

But sources told the News that both Cerberus and Blackstone are considered
serious contenders to buy Chrysler, which has ridden a roller coaster of
profits and losses since being acquired in 1998 by German automaker
Daimler-Benz AG.

Also, both firms are said to be interested in hiring former Chrysler
executive Wolfgang Bernhard to assist in a turnaround of Chrysler, which
lost $1.5 billion in 2006.

Bernhard, a former chief operating officer at Chrysler, has been targeted by
Cerberus and Blackstone as a possible executive or high-level consultant,
according to people close to the Chrysler sale process.

Speculation about Bernhard's automotive future has been rife since the
German exec resigned in January as head of the Volkswagen brand. He could
not be reached for comment Monday.

The interest in Chrysler by private-equity giants such as Cerberus and
Blackstone underscores the potential that investors see in the automaker,
which sold 2.7 million vehicles last year and posted revenues of $62
billion.

An investment firm could take Chrysler private, restructure its operations
and then sell its stock to the public or possibly to another automaker.

Cerberus has been an increasingly aggressive player in the auto sector, with
former Ford Motor Co. executive David Thursfield spearheading its auto
investment activities. Thursfield did not participate in the meetings
Monday.

Last year, the firm agreed to buy a 51 percent stake in GM's highly
profitable finance business. Cerberus is also leading a group of investors
attempting to buy bankrupt parts supplier Delphi Corp.

Blackstone also has a taste for the industry. In 2003, the firm acquired the
automotive operations of TRW Inc. for $4.7 billion and later took the
company public. Blackstone owns a 56 percent stake in Livonia-based TRW
Automotive Holdings, the largest manufacturer of auto-safety equipment.

With an estimated $125 billion in capital to spend on companies, Blackstone
Chairman Stephen Schwarzman was crowned the "new King of Wall Street" in the
latest issue of Fortune magazine.

Other private-equity firms or rival automakers could join the hunt for
Chrysler, according to people familiar with the process.

DaimlerChrysler has engaged investment banker J.P. Morgan Chase to handle
any prospective deals.