Kerkorian Makes Offer for Chrysler
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
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.
"I have tried to live my life so that my family would love me and my friends
respect me. The others can do whatever the hell they please."