Kerkorian-Iacocca tag team hit Chrysler execs with a reality check

The news rocked Chrysler Corp. headquarters.

It was April 1995, and Las Vegas financier Kirk Kerkorian was taking a run at the automaker, launching an unsolicited $20 billion takeover bid.

Perhaps even more astounding was whom he had teamed up with: Lee Iacocca, the legendary former Chrysler CEO, whose prolonged on-again-off-again retirement in the early 1990s had left lingering tensions with those who succeeded him at the helm.

One of those executives was Tom Stallkamp, then Chrysler’s head of purchasing and later its president.

“It was a total shock that Iacocca would come back and try to take the company back,” Stallkamp said in a telephone interview today. “When [Kerkorian] came at Chrysler, it was a little ill-timed and when he teamed up with Iacocca, it was not viewed as welcome within the company. But he shook the place up.”

Kerkorian died Monday at the age of 98.

Stallkamp acknowledged he “was never a fan of Kirk” and never thought Kerkorian really “knew that much about the auto business.”

But Kerkorian’s bid for Chrysler “convinced some people in Chrysler management that we couldn’t survive on our own and had to marry up with somebody, maybe not Daimler but somebody,” Stallkamp said.

He credits Kerkorian with shaking up management teams and boards that had become complacent -- both at Chrysler in the ’90s and at GM, in which Kerkorian took a stake in 2005 in a bid to speed that company’s overhaul.

“No public company can exist in a vacuum and that’s what Kirk showed. I think he shook up these companies and boards that thought no one could come after [them],” Stallkamp said. “In the big picture he was the beginning of the idea that companies can’t exist in a vacuum.”

Stallkamp said Kerkorian’s run at Chrysler, and his teaming up with Iacocca, helped Bob Eaton, the Chrysler CEO at the time, “get his head around the idea he had to do something with somebody and got the board to realize we can’t stay on our own.”

The idea that Chrysler needed a partner eventually led to one of the most notorious deals in automotive history -- the “merger of equals” with Daimler-Benz AG. After the deal, Kerkorian came out about $3 billion ahead on his investment in Chrysler shares.

He added it was no surprise that Kerkorian fell in with Iacocca. “Both of them were larger-than-life personas,” Stallkamp recalled.