Chrysler Cool To Kerkorian, Ogles Other Suitors

12 April 2007

CHICAGO: Beggars, it seems can be choosers. And whilst not exactly sitting on the sidewalk beside its upturned hat, DaimlerChrysler, the German-headquartered parent of loss-making US unit Chrysler, is picky about which representatives of potential bidders it is meeting in New York this week.

To the surprise of many Kirk Kerkorian's lieutenant will not be among them - despite the gambling entrepreneur's surprise $4.5 billion (€3.35bn; £2.28bn) bid earlier this month.

According to insiders, the automaker's cool reception of Kerkorian's offer is conditioned by the number of strings attached. These cast doubt, says Chrysler, on the competitiveness of his proposed deal.

DC management-board member and head of strategy, Rüdiger Grube, commenced a series of meetings on Wednesday with interested parties.

They included a trio of private equity bidders (Blackstone Group, Centerbridge Capital Partners and Cerberus Capital Management), plus Canadian auto-parts supplier Magna International with Ripplewood Holdings.

Kerkorian is unlikely to take this apparent snub lying down. He and his henchman Jerome York - a former Chrysler cfo - have a history of biting back at companies that reject their overtures.

In the mid-90s the duo challenged Robert Eaton, Chrysler's then ceo, to return more of the auto maker's cash to shareholders. And only last year they leaned on General Motors' chairman/ceo Rick Wagoner to accept a three-way alliance with Renault and Nissan Motor.

In neither case did they succeed - as Kerkorian likewise failed in 1995, when as Chrysler's largest stockholder he attempted to buy the company.

Said a DaimlerChrysler spokesman: "After reviewing all options, we will finally decide for the option that best meets our criteria ... we are satisfied with the process. Everything is going according to plan."

Data sourced from Wall Street Journal Online. additional content by WARC staff