DCX close to naming Chrysler top bidder

By From businessweek| Apr 26 2007
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A preferred bidder to buy the Chrysler Group is expected to emerge by the end of next week, the Free Press has learned.

Top DaimlerChrysler AG officials are expected to continue to meet with potential buyers in New York City this week and next, a person familiar with the process said.

Meanwhile, DaimlerChrysler Chief Executive Dieter Zetsche met with union leaders Tuesday in Stuttgart, Germany, in advance of corporate supervisory board meetings today and Thursday.

"Clearly they are moving forward with their agenda," said Jerry Dias, Canadian Auto Workers national representative. Dias was in the Tuesday meeting along with members of the UAW and German labor union IG Metall.

In Stuttgart, the unions reiterated their position that Chrysler should not be sold to a private equity firm, Dias said. Julia Engelhardt, a DaimlerChrysler spokeswoman, declined to comment Tuesday.

UAW President Ron Gettelfinger, who is one of the 20 supervisory board members, has said he would make the case for keeping Chrysler in the DaimlerChrysler family.

As the Free Press reported Tuesday, even if DaimlerChrysler announces a player for final negotiations, it is unlikely that a deal could be wrapped up quickly. The sale of Chrysler could become ensnarled with negotiations between the UAW and Detroit automakers this summer, making the situation even more complicated.

CAW President Buzz Hargrove has said he doesn't believe a deal can be finalized until the latter part of the year.

Several groups have emerged as interested parties in buying the Chrysler Group, which lost $1.5 billion on operations last year, carries a large pension liability and is struggling with a truck-heavy lineup.

Three groups seem to be in the position of being taken more seriously by DaimlerChrysler than others: Canadian auto-parts supplier Magna International Inc. and private equity firms Blackstone Group and Cerberus Capital Management.

In what is probably the strongest sign of support for one of the bidders to date, the CAW's Dias told Bloomberg News Tuesday, "If they choose to spin it off, we can live with Magna."

Billionaire Kirk Kerkorian's Tracinda Corp has offered $4.5 billion and the promise of an equity stake for the UAW in exchange for concessions on health care. The offer, however, apparently hasn't gotten much traction with DaimlerChrysler officials.

Rather than selecting just one finalist, several people in financial circles believe DaimlerChrysler might try to narrow it to two preferred bidders in order to give itself greater leverage during continued negotiations. But a person knowledgeable of the process expressed doubt about this idea.

On Feb. 14, Zetsche indicated that Chrysler might be sold when he announced that all options were on the table for the struggling Auburn Hills-based unit. He has also said he did not want all ties between Chrysler and Mercedes severed, indicating DaimlerChrysler might keep a stake in Chrysler if it is sold.

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