It was 7:30 p.m. in New York — 4:30 p.m. at Kerkorian's Las Vegas office — on April 11, 1995.
Kerkorian, who owned 36 million shares or 10 percent of Chrysler stock, told Eaton during the call that the next day, he would offer to buy all Chrysler stock and take the company private. Eaton was expecting the news, after several lower-level overtures. He had ordered Chrysler's lawyers to prepare a spirited defense.
The call lasted two minutes. Yet incredibly, the two titans of industry failed to communicate on the most basic point.
Kerkorian wanted to launch a leveraged buyout that would be financed by Chrysler's own cash. Chrysler management would participate in the buyout and would run the privately held company. But Eaton and his top managers saw it as a hostile takeover and were determined to fight.
According to the 2000 book Taken for a Ride: How Daimler-Benz Drove Off With Chrysler — an account of the Daimler-Chrysler merger by Bill Vlasic and Bradley Stertz — Eaton later claimed he had said: "You know what I have to do. You know we can't join you on this."
But Kerkorian insisted that the Chrysler chairman had told him that Eaton would stay neutral. Kerkorian's recollection of Eaton's exact words: "We can't say, hey, it's the right thing to do, but I won't oppose it."
That phone call was Eaton's last chance to head off the ill-fated takeover bid. On April 12, Kerkorian offered $22.8 billion for Chrysler. Eaton and Chrysler bitterly fought the bid, which dragged on for almost 10 months before the two sides negotiated a truce.
Demands for cash drained Chryslerís reserves.
He became a distraction to Chrysler executives.
His hostile bid for the automaker pushed Chrysler into Daimlerís arms.
'Rifle Right'The protagonists could hardly have been more different.
Mild-mannered Eaton was an engineer by training, a buttoned-down corporate conservative who had risen through the ranks of General Motors before joining Chrysler in 1992. Associates say Eaton was tough-minded and determined, but he disliked direct confrontation.
Kerkorian, now 91, was an amateur boxer who earned the nickname "Rifle Right" as a teenager in California. But this son of Armenian immigrants also was skilled at negotiating. In his youth, he persuaded the owner of a flight school and dairy to let him milk cows and shovel manure in exchange for flying lessons.
He also took risks to get ahead. During World War II, Kerkorian wangled a job flying Mosquito bombers from the factory in Canada across the treacherous North Atlantic to air bases in Scotland. Many delivery pilots died. Kerkorian survived, and after the war he used the money earned from those 33 flights to set up an air charter business.
Given the personality differences of Eaton and Kerkorian, perhaps it's no surprise that the Chrysler takeover war was long and bitter. Kerkorian agreed to halt his bid and not try again for at least five years. In turn, Chrysler bought back more of its stock, which raised the value of Kerkorian's shares.
Eaton had prevailed. But the harrowing experience convinced him Chrysler was too vulnerable as an independent and needed a strong partner. His truce with Kerkorian triggered a chain of events that led to the merger with Daimler-Benz three years later.
Kerkorian's demandsEaton was worried about Kerkorian's constant demands for Chrysler to buy back stock. Moreover, Kerkorian had ratcheted up the pressure by building an alliance with former Chrysler Chairman Lee Iacocca and hiring former Chrysler executive Jerry York.
Senior Chrysler executives noticed that Eaton was increasingly preoccupied with an anti-takeover defense. From time to time, he would unexpectedly raise the issue during staff meetings about unrelated topics.
In his eagerness to fend off Kerkorian, Eaton found a buyer — Daimler-Benz — that paid generously for Chrysler. But this came at a price. The buyer ultimately destroyed Chrysler's entrepreneurial corporate culture, said former Chrysler Executive Vice President Francois Castaing.
Eaton "gave away the company to the Germans," Castaing said. "He created a dynamic that destroyed Chrysler."
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