Juergen Schrempp, architect of the $36 billion takeover of Chrysler Corp. by Daimler-Benz AG, may have few equals in German business. The company he created, once considered visionary, lost $12.6 billion in market value in the nine years following the merger.
Shares of Stuttgart, Germany-based DaimlerChrysler AG have fallen 15 percent since Nov. 17, 1998, the day the combined company started trading. The stock in Germany peaked half a year after the merger and never recovered. Competitor Bayerische Motoren Werke AG's value more than doubled in the last nine years.
"Schrempp was certainly the biggest destroyer of capital in Daimler's history and most likely in the history of corporate Germany," said Juergen Graesslin, head of the DaimlerChrysler Critical Shareholders Association and an author of a biography on Schrempp, who left as chief executive officer Dec. 31, 2005, two years before his contract expired.
DaimlerChrysler CEO Dieter Zetsche recently announced the sale of Chrysler to private-equity firm Cerberus Capital Management LLC, ending Schrempp's plan to create a global auto empire by bringing together Daimler's Mercedes sedans with Chrysler's Dodge trucks. Under Schrempp's decade-long stewardship, DaimlerChrysler was supposed to become a dominant manufacturer in the world's major markets. Former Chrysler chairman Robert Eaton called the product portfolio of the group "unparalleled" when the merger was struck, and said DaimlerChrysler would become "the strongest automotive and transportation company in the entire world." Instead, the company posted losses at Chrysler and unsuccessfully attempted alliances with Mitsubishi Motors Corp. and Hyundai Motor Co.
Chrysler since 1998 has posted annual profits of as much as $5 billion and losses almost as large. Zetsche blamed limits on cost savings and technology sharing for the failure of the merger during a conference yesterday in Stuttgart. U.S. car buyers were unable to pay for "premium" Mercedes technology in Chrysler vehicles, Zetsche said. (Bloomberg)