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Kerkorian Makes Offer for Chrysler
Apr 5 02:42 PM US/Eastern
By KEN THOMAS
Associated Press Writer
NEW YORK (AP) – Billionaire investor Kirk Kerkorian is proposing to
pay $4.5 billion in cash for Chrysler, as parent DaimlerChrysler AG
examines what to do with its troubled U.S. automaking arm.
A deal would put Kerkorian in charge of Chrysler a decade after he
claims he was tricked out of a potential billions of dollars in the
1998 deal in which Germany’s DaimlerBenz combined with Chrysler.
The offer disclosed Thursday from Kerkorian’s Tracinda Corp. is
slightly lower than at least one competing bid from Canadian auto-
parts supplier Magna International Inc., worth a reported $4.7
billion.
Tracinda said it would place a $100 million deposit for the right to
exclusive bargaining rights.
Tracinda in a statement said it wants "to build and strengthen" the
troubled automaker and "will offer the UAW and Chrysler management the
opportunity to participate as equity partners in the transaction."
DaimlerChrysler shares climbed $2.96, or 3.7 percent, to $83.95 on the
New York Stock Exchange after the announcement.
California-based Tracinda said its offer is subject to Chrysler
reaching a new collective bargaining agreement with the United Auto
Workers as well as a deal with DaimlerChrysler on sharing the unfunded
pension liabilities and health care costs of Chrysler retirees.
A message seeking comment was left Thursday with a UAW spokesman.
Tracinda also said it’s ready to start a more extensive review of
Chrysler’s financial books right away and believes it could complete
it within 60 days.
Han Tjan, head of corporate communications for DaimlerChrysler in New
York, said the German-American automaker is talking with partners
about a sale and that the chairman is satisfied with the process.
"All of our options are still open. For us to talk about (Tracinda) is
speculation," Tjan said.
At least two groups in addition to Tracinda and Magna reportedly have
expressed interest in Auburn Hills, Mich.-based Chrysler. Cerberus
Capital Management LLC and a consortium of investors led by Blackstone
Group each have reviewed Chrysler’s finances and are expected to make
bids.
In a letter to DaimlerChrysler Chairman Dieter Zetsche, Tracinda said
it has been following the developments at Chrysler closely and has
been studying available materials about the automaker.
"Having been a major shareholder for over a decade we are very
familiar with both Chrysler and the automotive industry, and have come
to believe, all factors considered, that a private ownership approach
is in the best interests of all Chrysler constituencies," said the
letter, signed by Tracinda adviser Jerome York, a former Chrysler
Corp. executive.
The letter said it would be easier for a privately owned company to
take a long-term approach "to build Chrysler into a robust and
lasting, stand-alone entity."
Kerkorian long has had interest in automotive companies.
Late last year he dumped the last block of what once was a nearly 10
percent share of General Motors Corp., the world’s largest automaker.
He had Kerkorian pushed an alliance between GM, Nissan and Renault
SA. GM’s board voted to explore the idea of an alliance, but after
three months of discussion the idea was scrapped. York served as
Tracinda’s representative on the GM board but stepped down after the
alliance talks fell apart.
Kerkorian, whose wholly owned Tracinda was Chrysler’s largest
shareholder at the time of its 1998 merger with DaimlerBenz, sued the
combined company in 2000. He claimed that DaimlerBenz engineered a
takeover of Chrysler, then cheated him out of billions by casting the
deal as a merger of equals. A federal judge rejected his claim.
Associated Press Writer Corey Williams in Detroit contributed to this
report.
Copyright 2007 The Associated Press. All rights reserved.
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