DaimlerChrysler AG Chief Executive Officer Dieter Zetsche has said for the first time that he is negotiating the sale of Chrysler, preparing to untwist a 1998 merger. DaimlerChrysler has confirmed the speculations that it is in talks with prospective buyers for its loss-making US arm Chrysler. However, the world’s fifth-biggest carmaker also indicated that it was keeping all options open. Zetsche had shocked the automotive industry in February this year when he said that continued losses and fierce competition in the US meant that the German-American automaker was considering all options for its Chrysler unit, including a possible sale.
Dieter Zetsche said in remarks prepared for delivery to the group’s annual meeting, ‘I can confirm that we are talking with some of the potential partners who have shown a clear interest. But it is also true that we need to keep all options open, and that I cannot disclose any details, because we need to have the maximum scope for maneuver.’ The US unit has reported a $1.5 billion loss in 2006.
As of now, no apparent front-runner has yet emerged to buy Chrysler, but it is reported that Canadian auto-parts supplier Magna International Inc. has submitted a bid to buy the business for as much as $4.7 billion. According to the reports Blackstone Group LP and Centerbridge Capital Partners LLC are also planning to bid for Chrysler. Other potential buyers include Cerberus Capital Management LLC.
In recent times, the company has taken efforts to play down conjecture that reached intense levels in Stuttgart and in Detroit after Zetsche announced in February that all options are on the table for the Chrysler Group. Analysts have valued the unit from between nothing to $13.7 billion. The approximation differs with the value placed on assets such as brand names, factories and materials. Another major issue involved with the deal is Chrysler’s estimated $19 billion liability to pay health care benefits for unionized retirees. Some experts are of the view that the liability of the firm exceeds the value of the assets.
Market experts have said that they have entered a one-way street and it would be hard to reverse direction on the sale of Chrysler. Indicating towards forthcoming annual meeting they have opined that the annual meeting has been a battleground between investors and management over the past eight years. In the meanwhile, keeping the expectations high the Chrysler chief also announced that it will introduce 20 all-new models between now and 2009, including 13 refreshed vehicles.
