Initial Chrysler bids expected ahead of key meeting

DETROIT (Reuters) -- DaimlerChrysler AG expects to get an initial indication of bids for its Chrysler unit by the end of the month, just ahead of what is expected to be a stormy annual meeting dominated by discussion of the sale, according to people familiar with the situation.

DaimlerChrysler Chief Executive Dieter Zetsche and Chrysler Group Chief Executive Tom LaSorda are expected to be grilled on the progress of a possible Chrysler sale when they face shareholders in Berlin on April 4.

By getting bidders' "initial indications of interest" by the end of March, Zetsche could be in a position to provide an update on the progress by the annual meeting, one person close to the process said on Thursday.

But none of the bidders is expected to have a detailed offer ready by the end of March, this person said.

By moving quickly to limit the field of bidders, Stuttgart, Germany-based DaimlerChrysler would be in a position to proceed to the next step of what may be a very complicated sale, a second person familiar with the process said.

Private equity firms Cerberus Capital Management, Blackstone Group and Canadian auto parts supplier Magna International Inc. have emerged as the leading candidates for Chrysler, the No. 4 U.S. automaker, people familiar with the matter said.

General Motors has also talked to Chrysler about expanded cooperation in vehicle development or a potential acquisition.

Zetsche surprised analysts, Chrysler employees and dealers when he announced on Feb. 14 that Daimler was open to consideration of a sale of its U.S. unit that would unwind the 1998 merger between the two automakers.

Chrysler is also pressing ahead with a plan to cut 13,000 jobs and other steps in a bid to return to profitability by 2008 after losing nearly $1.5 billion last year and badly overestimating demand for trucks and sport utility vehicles.

LaSorda, who met with key Chrysler dealers on Wednesday as part of a continued bid to mend relations with the automaker's retail representatives, told them he expected a resolution of the sale process before September, according to a person briefed on that meeting.

In an e-mail sent to staff this week, LaSorda urged employees to stay focused despite the distraction of the pending sale of Chrysler -- home of the Chrysler, Dodge and Jeep brands.

"While we have been through turnarounds before, in some respects the current situation is unprecedented because of the uncertainty involved," LaSorda said in the e-mail.

DaimlerChrysler spokesman Han Tjan declined to comment on Thursday, saying that the company's position remained that all options were open for Chrysler.


Chrysler is expected to dominate discussion at the shareholders' meeting in Berlin, a gathering expected to begin in the morning of April 4 and continue for over 12 hours to near a midnight deadline for its conclusion.

"This one will go to the limits, probably," LaSorda said.

In an addition to the board-endorsed agenda, shareholders Ekkehard Wenger and Leonhard Knoll have proposed that the automaker change its name back to Daimler-Benz, arguing that the fallout from the failed 1998 merger has tarnished the company's reputation.

In the meantime, Chrysler dealers have voiced concern that the longer the uncertainty lingers, the greater the risk to sales. DaimlerChrysler's U.S. sales are down 2.8 percent in the first two months of the year.

"Fortunately, we're in a position down here where we are not hearing too much about it," said Alan Helfman, general manager of Helfman River Oaks Chrysler Jeep in Houston.

It is not clear what Chrysler would fetch in a sale, if Daimler decides to proceed with a spinoff.

Key Banc Capital Markets analyst Brett Hoselton said last week in a note to clients that he thought Magna had considered taking a minority stake in Chrysler in conjunction with a private equity partner.

While private equity firms have put the value of Chrysler near $5 billion, Magna has indicated that it believes the automaker should be valued closer to $4 billion, Hoselton said, based on unnamed "sources" close to the talks.

Ron Gettelfinger, the president of the United Auto Workers, sits on DaimlerChrysler's supervisory board and is expected to attend the shareholder meeting in Berlin.

Gettelfinger has said that he wants to see DaimlerChrysler remain together but would prefer to see Chrysler end up with a buyer in the auto industry rather than a private equity fund.

ATTENTION COMMENTERS: Automotive News has monitored a significant increase in the number of personal attacks and abusive comments on our site. We encourage our readers to voice their opinions and argue their points. We expect disagreement. We do not expect our readers to turn on each other. We will be aggressively deleting all comments that personally attack another poster, or an article author, even if the comment is otherwise a well-argued observation. If we see repeated behavior, we will ban the commenter. Please help us maintain a civil level of discourse.

Email Newsletters
  • General newsletters
  • (Weekdays)
  • (Mondays)
  • (As needed)
  • Video newscasts
  • (Weekdays)
  • (Weekdays)
  • (Saturdays)
  • Special interest newsletters
  • (Thursdays)
  • (Tuesdays)
  • (Monthly)
  • (Monthly)
  • (Wednesdays)
  • (Bimonthly)
  • Special reports
  • (As needed)
  • (As needed)
  • Communication preferences
  • You can unsubscribe at any time through links in these emails. For more information, see our Privacy Policy.