How will current DXC shareholders be dealt with after Daimler sells Chrysler?

Daimler absorbed Chrysler for one purpose and that was the ready availability of Chrysler's cash reserves. They had no real intent of making a go of it and the US should spit right in Daimler's face. Now that the cash is gone Chrysler was sold no cash reserves, and with 500 million dollars in the hole due to pension systems and retirements. The next step will be chapter 11 people will loose their pensions and retirement and their will be lay offs. The present group of owners are in it to produce a profit this cannot be done in Chrysler's present solvency. Just my opinions and observations.

Coasty

I think that the shareholders who are important enough to vote will decide how that is handled. Then everybody else will have to go along with it.

Cerberus is a private equity firm, not a public company. Daimler sold Chrysler to Cerberus (well 80.1% of it) so Chrysler has now in effect gone private. Your Daimler-Chrysler shares will in all probability soon return to their former name, Daimler-Benz.

This is the correct answer. Prior shareholders will get nothing. The value you lost was courtesy of whatever D-B mismanagement allowed them to buy a company for 37B and then give it away free. You owned D-B during that, so you share in the loss.

What was the value of DCX shares the moment they were created (in what, 1998? 1999)?

I believe their current value is $86 (perhaps a side-question here is how do DCX shares properly reflect both the Euro and the USD, given that Daimer-Chrysler is (was) a hybrid European/American corporation and the USD has seen quite a change in it's value compared with the Euro recently).

If Daimler bought Chrysler for 37B, then who did they buy it from? Who received that 37B?

And if Daimler spent $37B to access Chrysler's cash, then did Chrysler have more than $37B in cash at the time?

Here's what I've got about the merger...

Daimler-Benz shareholders would get 1 share of Daimler-Chrysler for each share of Daimler-Benz they held.

Chrysler shareholders would get about .5 share of Daimler-Chrysler for each share of Chrysler they held. I think this is where the $37B figure comes from. Did Daimler-Benz buy back their own stock to make this swap, or just issue new shares? I don't know.

Chrysler had about $9-10 billion in cash reserves at the time.

I believe that the sans-Chrysler corporation is going to call itself just Daimler, but I don't remember where I read that. DCX shareholders will have shares in this 'new' Daimler.

steve s

Presumably, the conversion of 2-shares-Chrysler to 1-share-DCX would have not resulted in any cost (cash or otherwise) to Daimler or existing Daimler shareholders, nor would it have required Daimler to issue new shares or dilute existing Daimler-Benz shares.

I still don't see how or where Daimer lost any cash or value when the acquisition of Chrysler was transacted.

If so, then why have the German shareholders of DCX been trying to crucify the executives of Daimler-Chrysler for the past year or two?

If the cash they looted from Chrysler was so lucrative, then why are they upset with the executives (now) over the current state of this amalgamated company?

My short answer is "I don't have a clue", ha! I guess Daimler-Benz shareholders expected to make money from the merger, but when I look at stock prices, I don't see that they did. In many ways, this is all so much hocus-pocus to me, but...

I think Chrysler Corporation was trading around $48/share just before the merger; Daimler-Benz was close to $100/share. Chrysler Corporation shareholders got .54 shares of DCX, which represented a premium to them of effectively about $53/share (there was an option for them to get a special bonus which would have brought this to effectively .62 shares of DCX...but I don't know if they got the bonus or not). Daimler-Benz shareholders got 1 share of DCX per Daimler-Benz share. I see what you're saying about Daimler just issuing new shares without diluting the equity of their pre-merger shareholders. But, since the share price just after the merger was about $80, I'd say the pre-merger shareholders lost some money. If I looked all this up correctly, DCX was trading at about $85 on Friday, but this was an increase from earlier this year...probably a bit of a bounce from the "happy news" on the sale of Chrysler.

I'm not a shareholder, just a MOPAR fan. But, from what I can see, if I've got my numbers right, the pre-merger Daimler-Benz shareholder has seen the stock price fall from nearly $100 to the $80 range. (No idea here, what heights or depths the stock price has seen in intervening years.) Of course, they'd prefer to be seeing the price rise by (at least?) 7-10% per year, plus getting some dividends. I mean, compare this loss to what they could have gotten just putting their money into a CD or something... Remember, the shareholders didn't get the cash reserves, DCX spent it.

I think Eaton and Schremp did pretty well, though.

Anyway, that's my very poor understanding of what happened. But remember I'm not a Daimler fan...I liked Chrysler and didn't think they needed the merger. I hope they can recover, but from what I've seen in US corporations and 'high finance', I'm not holding my breath.

And anyone who understands this better than I do should jump in and correct my errors, both in my numbers and my interpretation!

steve s

I agree with you, except for the killing of Chrysler by Cerberus. I would expect them to lift the value of Chrysler over a few years before the killing.

Chrysler had no "cash reserves." Check out the last Annual Report to Stockholders before the merger. Or are you claiming they lied in their report? That they had 2 sets of books?

But all the current debts are absorbed by Daimler, which is also contributing $1 billion to the Chrysler group.

Can't happen. Pensions are guaranteed by the US government.

Well, I bought Chrysler at what amounts to $30 a share (correcting for the conversion from my Chrysler shares to my DC shares). MY DC today is going for $87 a share. If that's a loss, I want more!

Federal guarantees only cover a percentage of original pensions.