Former Chrysler Chiefs Defend Deal As Merger Of Equals

From

mailing on Friday 05-DEC: Former Chrysler Chiefs Defend Deal As Merger Of Equals

Former Chrysler chief Robert Eaton and James Holden testified in Delaware court Wednesday afternoon and Thursday that they did not think of the deal that brought Daimler-Benz and Chrysler together in 1998 as a "takeover."

The testimony surprised and frustrated lawyers for billionaire financier Kirk Kerkorian, a former Chrysler shareholder, who has brought a $3 billion suit against DaimlerChrysler alleging German management, especially chairman Juergen Schrempp, hoodwinked Chrysler shareholders into approving a merger that was really a takeover. "I don't believe that Mr. Schrempp has ever take control of the company," Eaton testified in response to questions by an incredulous Terry Christensen, lawyer for Kerkorian. Eaton also testified, though, that the Financial Times article in which Schrempp implied he never intended Chrysler to be anything but an operating unit, made him angry. "If he said that, he was after control of Chrysler," Eaton said. "Obviously there wouldn't have been a business agreement put together. Chrysler was not for sale."

...

Former Chrysler CEO James Holden who succeeded Eaton as head of Chrysler, and who was sales and marketing chief when the "merger" took place in 1998, said he still views the deal as a merger and told the Judge that Chrysler may not have survived the recent economic downturn without the deep pockets of Daimler-Benz. ...

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I think it's really amazing that Eaton and Holden are still defending the deal, in light of Eaton's assertion that the deal wouldn't have been put together if they had realized Schrempp was after control of Chrysler, or the part where Holden is claiming that Chrysler would've tanked if it weren't for Daimler's 'deep pockets'. At best the latter is pure speculation made by somebody who was ousted before the economic downturn really began, at worst it's revisionist history.

. --Geoff

Also:

under oath in a trial here Thursday afternoon, Eaton, whowas then co-chairman of the newly created parent company,DaimlerChrysler AG, said that Stallkamp had "bad chemistry" withSchrempp. Eaton himself asked the DaimlerChrysler supervisory board inGermany to replace Stallkamp, Eaton admitted. ....

Chrysler Chief Financial Officer Jerome York. York, who left Chrysler in 1993, is emerging in testimonies, depositions and attorney questioning as a shrewd strategist who prophesied trouble for his former employer, and then quietly moved behind the scenes to bring Daimler and Chrysler together before it was too late....York was tapped as vice-chairman of Tracinda in 1995, after leaving Chrysler for IBM. To recruit him, Kerkorian gave him a $1 million-a-year base salary, then paid him a $26 million signing bonus, and then for reasons Kerkorian now says he cannot recall, paid him an additional $40 million, according to testimony this week from a Tracinda executive....

Fascinating stuff if you've been following the merger since '98.

--Geoff

It seems to me that US people are upset because Chrysler came under the control of a German company.. thats how some felt in Sweden as their auto industry was bought up by US companies, and how Jaguar and Aston Martin felt in the UK about the Ford takeover.. live with it.. some Chrysler products have benefitted from the use of Mercedes technolgy and parts.. re the Jeep lineup (and I am a Jeep owner myself), many feel that Chrysler (pre takeover) have done nothing for the original AMC models.. GM are axing the Oldsmobile name as of next year, and the Camaro is a victim too.. when models become stale, somebody has to do something.. leaving model ranges as they are with little or no change reults in what happened in the UK.. foreign competition wiped the mainstream makers out..

-- History is only the past if we choose to do nothing about it..

Ah, but that's not how business operates, modern business anyway. That isn't what happened in the UK.

Today it's all about empire building and creating monopolies. You see when you have a market that only has about 3-4 major suppliers in it, the suppliers have such a large economy of scale going that a tiny producer cannot manufacture anywhere close to the cost of manufacture for the 3-4 large suppliers. The large suppliers in turn when there's that few of them, they all have a large enough chunk of the market to make a pile of money without attempting to steal market from the others. So it's to none of their interest's to initiate a price war, and while they don't actually overtly collude with each other, they all set prices similar to each other.

So today what goes on is these large businesses will look at a small market like the UK and they will use the huge revenue they are getting elsewhere to go in and dump product, acquire smaller producers, etc. in short do whatever it takes to eliminate all but 3-4 suppliers. Then once that happens all of the remaining suppliers jack up their prices and use the revenue from this to go elewhere and repeat the process.

Ted

Nomen Nescio wrote in news: snipped-for-privacy@dizum.com:

Well lets see, the facts are when the Japanese entered the American market, those honest guys in Detroit, ran to Washington and got large surcharges put on imported cars to the tune of close to 1000 dollars. The day the surcharge took effect they raised their prices 1000 dollars. This went through a few repetitions and car prices went through the roof. You actually believe it is the Japanese manufacturers fault for the large price increases? I bought a 1973 Dodge Dart and 2 years later it had doubled in price. Seems everybody in the retail business discovered that women were now working in most households and prices went through the roof. Also the dumbing down of Americans which resulted in people only asking what the monthly payments are, has also led to inflationary pricing.

...who are testifying that they weren't well informed.

--Geoff