Contact Us

Home> International News> News detail

DCX investors: Dump Chrysler, restore Benz

From detnews| March 14,2007

With the sale of the Chrysler Group looking increasingly likely, some critics of the nine-year merger are looking ahead to the next step -- restoring the German automaker's old name.

Two German shareholders will propose that the company's name be changed back to Daimler-Benz AG at the annual meeting April 4 in Berlin. The change could take place after a Chrysler sale, but no later than March 31, 2008.

"It will be a very popular resolution among the individual German shareholders," predicted Ekkehard Wenger, a longtime shareholder activist and business professor and a sponsor of the resolution.

DaimlerChrysler opposes the resolution and urged shareholders to vote against it. "The DaimlerChrysler name is established all over the world," the company said on its Web site.

"There are no grounds to change the name of the corporation."

But what if Chrysler is sold? That seems an increasingly likely prospect as potential buyers are brought in to examine the Auburn Hills automaker. "We don't speculate on what would happen if we chose one option," said DaimlerChrysler spokesman Thomas Froehlich. "Up to now, all the options are open."

With investors pushing for a Chrysler sale, Gov. Jennifer Granholm met with DaimlerChrysler CEO Dieter Zetsche in Germany on Tuesday to urge him not to abandon Chrysler or Michigan. United Auto Workers President Ron Gettelfinger, in separate interviews with two Detroit radio stations, reiterated his hope that Chrysler will remain part of DaimlerChrysler.

Meanwhile, speculation mounted about a potential Chrysler buyer. The Blackstone Group and Cerberus Capital Management, private equity firms, have emerged as the lead contenders to buy Chrysler, and Canadian auto supplier Magna International Inc. could be a minority partner with a private equity firm, Wall Street analyst Brett Hoselton of KeyBanc Capital said in a report Tuesday.

Although Zetsche is clearly responsive to shareholder discontent with Chrysler's performance, investors are likely to be as vocal this year as they have in the past at the company's annual meetings.

Critics fault Zetsche

A group calling itself the Critical Shareholders because its members opposed the merger from the outset faults Zetsche for failing to sell Chrysler in 2004 and 2005 when it was profitable.

"Instead of that, Dr. Dieter Zetsche reacted far too late and waited for Chrysler's latest loss" of $1.5 billion for 2006, it said.

On Tuesday, Granholm said Zetsche offered no clues about what might happen with Chrysler, nor did he commit to a timetable for a decision during their 45-minute meeting in Zetsche's Stuttgart office.

"I asked about the prospect of selling Chrysler, but he's not in a position to talk about that at the moment, so we did not go very far with that," Granholm told reporters in a conference call after the meeting.

But she said she was optimistic that, whatever happens, "there will be a strong DaimlerChrysler or Chrysler presence in Michigan in some way, shape or form."

Granholm pushes investment

Granholm, who is on a trade trip to Germany and Austria, also urged Zetsche to consider Michigan for Chrysler's planned $3 billion investment in more fuel-efficient powertrains, which includes building a V-6 engine plant.

"He was very open to that," she said. "However, the decision has not been made."

Whatever the impact on Michigan, it is far from clear whether DaimlerChrysler will ultimately sell Chrysler.

In his report Tuesday, Wall Street analyst Hoselton said Blackstone and Cerberus were among several suitors that visited Chrysler's Auburn Hills offices last week to review the automaker's finances as part of a process that could result in an offer as soon as the end of this month.

He wrote that the likely scenario could be a partnership in which Magna would have a 30 percent to 40 percent minority stake for about $1.5 billion, with a private equity fund as the majority investor. Magna, which does about 25 percent of its business with Chrysler, would be responsible for running Chrysler factories for the private equity buyer, the report says.

"While we believe (Magna) remains interested in taking significant action toward Chrysler, our sources indicate the likelihood of such actions is now much reduced," Hoselton wrote. Magna spokeswoman Tracy Fuerst said in an e-mail that Chrysler is one of the supplier's largest customers, involving many contracts and thousands of employees.

"Any preliminary discussions which Magna has had, or may have, with Chrysler regarding potential alternatives would be conducted on a strictly confidential basis, and will not be disclosed publicly," Fuerst said in an e-mail.

Hoselton said there's a 50-50 chance that Chrysler will be sold.

"To really make the combination valuable to Daimler, you have to start really integrating the two companies and that would be a pretty significant choice or decision for Dieter to make," he said. "My sense is it's pretty risky. "

Union leaders from the UAW and Canadian Auto Workers would rather Chrysler not be untangled from its parent company.

"We want to keep the Chrysler Group in the DaimlerChrysler family," Gettelfinger said in an interview Tuesday on WJR-AM in Detroit. "But we're realistic, we know there's a lot going on and we'll deal with it as we can."

CAW chief Buzz Hargrove sees no alternative but a sale.

"Once they went public and said everything's on the table including a sale," Hargrove said, "that not only put the company in play, they put it in play on the cheap."

All Rights Reserved. Do not reproduce, copy and use the editorial content without permission. Contact us:

Install Gasgoo APP

Anytime and anywhere to know the dynamics of China's auto industry

Hot Auto Products| e-Catalog| Auto Products Directory| Auto Parts Manufacturers|

Gasgoo Site: Automotive News| 中文站| 汽车资讯| 出口供应商| 汽车社区|

Copyright Notice © 2016 Corporation and its licensors. All rights reserved.