Chrysler buyers ready; renaming asked

Chrysler buyers ready; renaming asked
http://www.freep.com/apps/pbcs.dll/article?AID=/20070314/BUSINESS01/703140330/1014

Private equity firms eyeing a potential Chrysler Group purchase -- one of
which reportedly hired former Chrysler executive Wolfgang Bernhard -- feel
the Auburn Hills-based unit of DaimlerChrysler AG is worth $5 billion, an
analyst said Tuesday.

Canadian parts maker Magna International Inc., another potential suitor,
reportedly puts the value at $4 billion.

Big-name private equity firms Blackstone Group and Cerberus Capital
Management have emerged as the leading contenders to buy the Chrysler Group,
KeyBanc Capital Markets analyst Brett Hoselton said in a note issued
Tuesday.

In a sign of how much pressure is building in Germany against the troubled
unit, two shareholders are calling for Chrysler to be dropped from the
company's formal name by March 31, 2008, if Chrysler isn't sold first.

"Maintaining a corporate name that evokes associations with the failure of
the business combination with Chrysler is detrimental to the image of the
corporation and its products," wrote shareholders Ekkehard Wenger and
Leonhard Knoll in a proposal to amend the company's articles of
incorporation at the annual meeting April 4 in Berlin.

"This is all the more true as unflattering nicknames such as Doting Daimler,
Daimler-Crisis or even Crime-ler have long been in circulation."

Worldwide speculation has engulfed the Chrysler Group ever since last month
when DaimlerChrysler CEO Dieter Zetsche refused to rule out selling the U.S.
unit.

Bids for the Chrysler Group are expected to be submitted by the end of the
month, the Wall Street Journal has reported. Officials from Blackstone,
Cerberus and Magna reportedly met individually with Chrysler Group brass
last week, reviewing the company's finances and plans.

Hoselton said that Magna is interested in becoming a partner or minority
owner in Chrysler -- with the Canadian company owning as much as 40% of the
automaker.

Under this scenario: The company would partner with a private equity firm
that would have a majority stake while Magna would be responsible for
running Chrysler. Under a potential deal, it's believed that Magna would
have an option to purchase an additional 10% to 20% of Chrysler from the
private equity firm within as short a time as 18 months, giving the firm an
exit strategy.

However the likelihood of such a proposal happening is lessened, Hoselton
said, in part because of Magna's lower assessment of Chrysler's value vs.
the private equity firms' opinions.

In addition, Hoselton, citing unnamed sources, said that Magna's meeting
with Chrysler March 9 "was more about MGA playing defense now as opposed to
offense."

"Private equity buyers do not necessarily need MGA's operational expertise,"
Hoselton said. "We believe Chrysler's former chief operating officer,
Wolfgang Bernard, could offer a buyer the same benefits given his
understanding of the automaker's problems and the tenacity with which he
attempted to turn around Volkswagen."

The Financial Times of London, citing unnamed sources, reported Tuesday on
its Web site that Bernhard, who had a large role in Chrysler's previous
turnaround five years ago, has signed an "advisory contract" with
Cerberus.Magna Chairman Frank Stronach confirmed to a Canadian newspaper
last week that his company was looking into Chrysler but noted that it was
too early to say if his company would end up making a bid.

Also on Tuesday, UAW President Ron Gettelfinger, who has said he is working
to prevent a sale, said that he's not ready to give up. "I've been around
this process long enough to know that I'm not ready to concede that the
Chrysler Group is going to come out of DaimlerChrysler," he said on WJR-AM
radio.

Gettelfinger, who sits on DaimlerChrysler's supervisory board, was asked if
he would prefer a company already in the auto industry, such as Magna, to
purchase Chrysler as opposed to a private equity firm. "It does make sense
that it stays in the auto group," he said. Later Gettlefinger noted: "Not
all equity firms are bad -- I might add."

Under the proposal to change DaimlerChrysler's name, the unhappy
shareholders are proposing the name be changed to Daimler-Benz AG.

"The disadvantages this entails for shareholders, customers and employees
can only be borne at most for a short transition period until there is a
proper separation from Chrysler," they wrote of the current name and its
reputation. "If a proper separation cannot be effected within one year, this
would only serve to underscore the need to remove this affliction on the
image from the corporation's name."

The group also proposed a slew of other changes and actions, including an
investigation into whether former DaimlerChrysler Chairman Juergen Schrempp
should be held financially liable for comments he made to the Financial
Times regarding the motivations of the deal that brought Daimler-Benz and
Chrysler Corp. together in 1998.

The company's supervisory and management boards oppose the name change and
other proposals by the shareholders. "The DaimlerChrysler name is
established all over the world," the company said in a statement. "There are
no grounds to change the name of the corporation."



--
The credit belongs to the man who is actually in the arena; whose face is
marred by dust and sweat and blood; who strives valiantly; who errs and
comes short again and again; who knows the great enthusiasms, the great
devotions and spends himself in a worthy cause. Who at the best, knows the
triumph of high achievement; and who, at the worst, if he fails, at least
fails while daring greatly.
T.R. April 10, 1899

 

Not among the general public, but they will be now that they published
that ridiculous comment!

Bill Putney
(To reply by e-mail, replace the last letter of the alphabet in my
address with the letter 'x')

 

IMO the sooner Chrysler is disassociated from Mercedes the better for
Chrysler.
The current CR auto issue rates Mercedes cars at the bottom (worse than
all other makes) for problems; Chrysler is in a reasonable middle
position.