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DaimlerChrysler 'rejected GM offer'

From smh| March 28,2007

DaimlerChrysler AG initially turned down an offer General Motors Corp made in late January to buy the unprofitable Chrysler Group but the bid is still active, the Detroit News reported.

Quoting people familiar with the situation, the trade journal said, "General Motors Corp. has a bid on the table for the Chrysler Group and remains a long-shot candidate to acquire the struggling US division of DaimlerChrysler AG."

While GM's offer, made in late January, was initially rejected by DaimlerChrysler, the bid is still active as other potential buyers gear up to make their own proposals this week, the report said.

GM's bid has three components but does not include any cash payment for Chrysler, people familiar with the situation were quoted as saying.

To acquire Chrysler, GM offered to give DaimlerChrysler a minority stake in GM stock of less than 10 per cent.

In addition, the proposal called for DaimlerChrysler to pay GM more than $US1 billion ($A1.24 billion) to defray Chrysler's health care costs, and then team up with GM to seek financial concessions for Chrysler from the United Auto Workers, according to the report.

The GM proposal was rejected as too low by DaimlerChrysler, according to people close to the talks.

The rejection then prompted DaimlerChrysler Chief Executive Officer Dieter Zetsche to go public on February 14 that "all options" were being explored for Chrysler.

Zetsche's announcement triggered a rush of interest in Chrysler from heavyweight Wall Street investors as well as the Canadian auto supplier Magna International Inc.

Last week, Magna made a provisional offer to acquire Chrysler, according to a source close to Magna's board of directors.

However, the source close to Magna was qyited as saying Sunday that the supplier is still talking to several private-equity firms about potential partnerships.


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