Kerkorian makes $4.5-billion offer for Chrysler

Tracinda Corp. has offered $4.5 billion in cash to buy the Chrysler Group, a letter to DaimlerChrysler AG says.

Furthermore the private investment group owned by Kirk Kerkorian is offering $100 million to DaimlerChrysler for a 60 day exclusive window to conduct due diligence.

"As Tracinda's letter to DaimlerChrysler's Supervisory Board suggests, we have been following Chrysler closely and studying publicly available materials. And 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 Jerry York, a former Chrysler executive and Kerkorian adviser, in a letter to DaimlerChrysler Chairman Dieter Zetsche.

A letter to the DamilerChrysler supervisory board made public this afternoon says Tracinda wants to partner with the UAW and Chrysler senior management.

"Tracinda intends to build and strengthen Chrysler as an independent entity by partnering with the United Auto Workers and senior management of Chrysler, and will offer the UAW and Chrysler management the opportunity to participate as equity partners in the transaction," the company said.

The offer is contingent on reaching a new "satisfactory" collective bargaining agreement and "reaching an equitable arrangement with DaimlerChrysler regarding sharing of unfunded pension liabilities and health care costs of Chrysler retirees, as well as other customary conditions."

Tracinda said it is willing to forfeit $25 million of the $100 million deposit if after the 60 day review the investment company decides not to go through with the deal.

"Tracinda believes its offer would permit DaimlerChrysler to dispose of Chrysler at an attractive price and enable DaimlerChrysler to focus on its other operations," the company said. "Tracinda also believes that the experience, expertise and financial strength Tracinda and its team will bring to Chrysler will greatly benefit Chrysler and its employees, suppliers and customers."

The deal is not subject to financing because the company believes it will be able to obtain.

DaimlerChrysler spokesman Hartmut Schick declined comment.