Another round of bids for the Chrysler Group are expected to be submitted this week, as DaimlerChrysler AG's leaders begin gathering in Stuttgart as early as today for high-level management and supervisory board meetings.
According to a source familiar with the process, "refined offers" likely to include firm financial details are due by mid-week -- just in time for DaimlerChrysler's governing supervisory board, including United Auto Workers President Ron Gettelfinger, to potentially discuss details at its Wednesday meeting.
Bidders are expected to include Cerberus Capital Management, whose team includes former Chrysler COO Wolfgang Bernhard and former Ford Motor Co. executives. Until last week, Cerberus was set to be a leading investor in bankrupt Delphi Corp.
Also in the game is the duo of Blackstone, Wall Street's top private equity firm, and Centerbridge Partners. And there's Magna International Inc., the Canadian parts supplier allied with Onex and preferred, at least rhetorically, by the UAW and Canadian Auto Workers.
How a potential deal would be structured remains to be seen. But one likely scenario envisions Chrysler's car and truck operations being conveyed to the new owner quickly because, nine years into the hyped "merger of equals," the vehicle operations of Chrysler and sister company Mercedes-Benz remain largely separate.
But the Chrysler portion of DaimlerChrysler Financial, where the German automaker's captive finance arm books roughly half its annual profits from the sale of Chrysler, Dodge and Jeep vehicles, could remain under the control of parent Daimler for at least several years. Daimler would get a gradual exit strategy and access to Chrysler financing cash.
"Whoever ends up with Chrysler would have Daimler as a minority shareholder for some period," said a ranking source close to the process. "But I don't foresee them being involved in the day-to-day management of the company."
Deal shapes up -- or does it?
What about Chrysler's $18 billion health care liability that is weighing heavily on Daimler? One scenario envisions the UAW finally giving Chrysler the same health care deal it already gave GM and Ford Motor, saving as much as $400 million a year.
And, the parties would negotiate a deal patterned after a landmark pact at Goodyear Tire & Rubber Co. that essentially would pay the union a lump sum to assume health care liabilities.
Despite the prevailing wisdom in Germany that Chrysler is a hopelessly broken basket case, Chrysler and Mercedes likely would continue sharing parts and purchasing. And joint product programs like the next-generation Jeep Grand Cherokee and Mercedes M-Class SUVs probably would run their course.
"Chrysler is not in bad shape," the ranking source told me. "The recovery plan is achievable. Their product plan is in reasonably good shape."
That's debatable. What isn't debatable is the frenzied handicapping about which group -- Cerberus, Blackstone-Centerbridge or Magna -- may be currently favored by Daimler's ranking brass.
Gettelfinger, for one, has made no secret of his displeasure that private equity firms determined to make money are bidding to acquire Chrysler from its impatient parent. Job one for the union, he told WJR-AM 760 Friday, is to keep Chrysler in the Daimler family.
Digging dirt, throwing chum
Not likely, considering the vast mountain of paper wealth that has been created -- and the expectations raised -- since Chairman Dieter Zetsche said on Valentine's Day that all options are open for Chrysler.
Another person close to the process said DaimlerChrysler is poring over the bids and asking for more specifics as it moves toward picking a partner.
For weeks or more, Cerberus, named after the three-headed dog guarding the gates of hell, was considered the lead dog on the strength of Bernhard, its aggressiveness and a growing auto empire that includes a majority stake of General Motors Corp.'s GMAC, control of GDX Automotive and Tower Automotive and a big chunk of Delphi.
That was then. Cerberus' abrupt exit from Delphi, troubles at GDX and stiff public resistance from union leaders to Chrysler being sold to any private equity are prompting speculation that Magna, which also assembles minivans and SUVs for Chrysler in Europe, could be emerging as a front-runner.
Or maybe it isn't. Participants in the process are quick to downplay speculation that their bid is a leading bid, even as they seek to gather intelligence on rivals or spread a little dirt -- or both.