Buyout firm meets with Chrysler
Cerberus, a leading private-equity firm, is the first Wall Street investor to visit Chrysler headquarters in Auburn Hills for an in-depth review of the automaker's finances and operations.
A second private-equity powerhouse, the Blackstone Group, is scheduled to meet one on one with Chrysler management later this week, people familiar with the matter told The Detroit News.
The meetings suggest that the sale process for Chrysler is entering a critical phase, as big-money investors begin to dig deep into the prospects of purchasing the one-time No. 3 U.S. automaker.
Chrysler was essentially put up for sale Feb. 14 when DaimlerChrysler CEO Dieter Zetsche announced that "all options" were being considered for the struggling automotive icon.
Seperately, Monday, Zetsche said he does not rule out selling Chrysler Financial, the finance arm of Chrysler, as it considers all options for the U.S. division.
"In case we would decide for an option that would change the current structure for the Chrysler Group, we have the option to do the same for the financial arm or not," he said during a Merrill Lynch Global Automotive Conference in Geneva, broadcast on the Internet.
Cerberus and Blackstone could be joined in a bidding war by other investment groups as well as General Motors Corp, which has been in discussions about acquiring Chrysler since December.
A spokesman for Cerberus in New York declined comment Monday about the on-site visit at Chrysler. "We routinely don't comment on market rumors and speculation," said Peter Duda of Cerberus.
Chrysler spokesman Jason Vines also declined to comment Monday.
But sources told the News that both Cerberus and Blackstone are considered serious contenders to buy Chrysler, which has ridden a roller coaster of profits and losses since being acquired in 1998 by German automaker Daimler-Benz AG.
Also, both firms are said to be interested in hiring former Chrysler executive Wolfgang Bernhard to assist in a turnaround of Chrysler, which lost $1.5 billion in 2006.
Bernhard, a former chief operating officer at Chrysler, has been targeted by Cerberus and Blackstone as a possible executive or high-level consultant, according to people close to the Chrysler sale process.
Speculation about Bernhard's automotive future has been rife since the German exec resigned in January as head of the Volkswagen brand. He could not be reached for comment Monday.
The interest in Chrysler by private-equity giants such as Cerberus and Blackstone underscores the potential that investors see in the automaker, which sold 2.7 million vehicles last year and posted revenues of $62 billion.
An investment firm could take Chrysler private, restructure its operations and then sell its stock to the public or possibly to another automaker.
Cerberus has been an increasingly aggressive player in the auto sector, with former Ford Motor Co. executive David Thursfield spearheading its auto investment activities. Thursfield did not participate in the meetings Monday.
Last year, the firm agreed to buy a 51 percent stake in GM's highly profitable finance business. Cerberus is also leading a group of investors attempting to buy bankrupt parts supplier Delphi Corp.
Blackstone also has a taste for the industry. In 2003, the firm acquired the automotive operations of TRW Inc. for $4.7 billion and later took the company public. Blackstone owns a 56 percent stake in Livonia-based TRW Automotive Holdings, the largest manufacturer of auto-safety equipment.
With an estimated $125 billion in capital to spend on companies, Blackstone Chairman Stephen Schwarzman was crowned the "new King of Wall Street" in the latest issue of Fortune magazine.
Other private-equity firms or rival automakers could join the hunt for Chrysler, according to people familiar with the process.
DaimlerChrysler has engaged investment banker J.P. Morgan Chase to handle any prospective deals.
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