Kerkorian’s Chrysler Bid Knocked
DETROIT _ Kirk Kerkorian’s $4.5 billion offer to purchase the Chrysler Group is receiving a cool reception in Germany.
“The more educated public sees his bid with some interest but seems to be convinced that he is merely trying to pull a quick trick _ his $4.5 billion is a lot less than the valuation of $9 billion, which is now assumed as fair here,” said Christoph Stuermer, an auto analyst in Frankfurt, Germany, with Global Insight. “The inner circles at DCX are certainly convinced that he is the last person on Earth they would be willing to sit down and negotiate with, after all the upheaval he has been causing.”
DaimlerChrysler top executives do not view Kerkorian’s offer as favorably as others, in part because it is lower than what other potential suitors have been discussing and includes disagreeable stipulations, a person familiar with the thinking said.
Top DaimlerChrysler officials are expected to meet in New York this week with some of the parties trying to purchase the German company’s struggling U.S. unit.
Last week, Kerkorian’s Tracinda Corp. made public its offer to purchase Chrysler Group, saying the billionaire investor wanted to partner with organized labor, giving the workers part ownership in exchange for health care concessions.
Canadian Auto Workers President Buzz Hargrove said he opposes the Tracinda offer.
“I am not interested in Kerkorian’s style. His whole history has been to make money by taking advantage of throwing a lot of people out of work,” Hargrove said. “He’s the guy I am totally opposed to.”
The UAW has not commented officially.
Kerkorian also wants DaimlerChrysler to pick up a share of Chrysler’s pension and health care liabilities, which investment bank Goldman Sachs has said could total $16.5 billion for a buyer to inherit.
Kerkorian has a storied and confrontational history with Chrysler.
In the 1990s, he attempted a takeover but failed. After the 1998 union of Daimler-Benz AG and Chrysler Corp., he unsuccessfully sued, saying the deal was structured in a way that cheated him out of a higher stock price.
“I think some consider his bid a mere provocation in order to prove his point that the merger was not at-equal in the first place,” Stuermer said.
Chrysler’s future has been in question since Feb. 14 when DaimlerChrysler Chairman Dieter Zetsche announced that all options are open for the Chrysler Group and refused to rule out a sale.
At last week’s shareholder meeting in Berlin, he confirmed that DaimlerChrysler has been in talks with interested parties regarding Chrysler’s future, but he declined to elaborate.
Vocal shareholder Leonhard Knoll, who lambasted the DCX supervisory board and management during the annual meeting and called for Chrysler to be stripped from the company’s name, is withholding judgment on the offer.
“You need to know more for an adequate judgment,” he told the Detroit Free Press. “Especially the question of the use of Daimler know-how and the possibility of a kind of kickback over the pension and other social security accruals.”
In addition to Kerkorian, three other groups are known to be in the hunt, including Canadian auto supplier Magna International Inc. and private equity firms Blackstone Group and Cerberus Capital Management.
People familiar with the interested parties say two other groups have also been sniffing around the Auburn Hills, Mich.-based unit, which lost $1.5 billion last year.
DaimlerChrysler officials remain tightlipped about any sale prospects. DaimlerChrysler spokesman Han Tjan said Tuesday, “We think we have an orderly process.”
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