Kerkorian bids again for troubled Chrysler
NEW YORK – Billionaire investor Kirk Kerkorian, who lost out in Chrysler’s 1998 merger with Daimler-Benz, wants to buy the troubled automaker back from its now-unhappy German owners.
Kerkorian’s wholly-owned investment company, Tracinda Corp., on Thursday made a $4.5 billion cash offer for DaimlerChrysler AG’s U.S.-based Chrysler unit.
A deal would put Kerkorian in charge of Chrysler a decade after he claims he was tricked out of potentially billions of dollars in the 1998 deal in which Germany’s Daimler-Benz joined with Chrysler in the so-called merger of equals.
Long an active investor in automakers, the 89-year-old former movie mogul once offered $22.8 billion for Chrysler in an unsuccessful 1995 takeover bid.
The offer disclosed Thursday from Tracinda is slightly lower than at least one competing bid from Canadian auto-parts supplier Magna International Inc., worth a reported $4.7 billion.
Tracinda said it would place a $100 million deposit for the right to exclusive bargaining rights.
Tracinda in a statement said it wants “to build and strengthen” the troubled automaker and “will offer the UAW and Chrysler management the opportunity to participate as equity partners in the transaction.”
DaimlerChrysler shares climbed $3.42, or 4.3 percent, to $84.41 in late trading on the New York Stock Exchange after rising to a new 52-week high of $84.75 earlier in the session.
California-based Tracinda said its offer is subject to Chrysler reaching a new collective bargaining agreement with the United Auto Workers as well as a deal with DaimlerChrysler on sharing the estimated $22 billion unfunded pension liabilities and health care costs of Chrysler retirees.
A message seeking comment was left Thursday with a UAW spokesman.
Russell Phillips, union steward for UAW Local 1700, said word of a possible sale began filtering through the Sterling Heights, Mich., assembly plant Thursday afternoon. Phillips, a 20-year Chrysler employee, said he thinks the UAW would be interested in listening to such an offer from Tracinda.
“It would be very interesting if we can get something like that so we can help our members,” Phillips said. “A lot will depend on how open they are going to be with the UAW and if they really are willing to sit down and talk with us.”
Analysts said the deal would be difficult for Kerkorian to pull off because of his turbulent history with Chrysler and the size of the company’s large legacy costs.
“I’m not sure what Kirk brings to the party except he can’t help himself when it comes to playing with Chrysler,” said David Healy, an analyst with Burnham Securities.
But David Cole, chairman of the Center for Automotive Research in Ann Arbor, Mich., said any deal would require an arrangement with labor on the legacy costs and noted that York has a long history of working with the UAW.
Tracinda said it’s ready to start a more extensive review of Chrysler’s financial books right away and believes it could complete it within 60 days.
Han Tjan, head of corporate communications for DaimlerChrysler in New York, said the German-American automaker is talking with partners about a sale and that the chairman is satisfied with the process.
“All of our options are still open. For us to talk about (Tracinda) is speculation,” Tjan said.
At least two groups in addition to Tracinda and Magna reportedly have expressed interest in Auburn Hills, Mich.-based Chrysler. Cerberus Capital Management LLC and a consortium of investors led by Blackstone Group each have reviewed Chrysler’s finances and are expected to make bids.
“As a matter of policy, we can offer no confirmation on any bid submission by Cerberus,” said Cerberus spokeswoman J.J. Rissi. John Ford, a spokesman for Blackstone, said he could not comment on Tracinda’s bid.
A message seeking comment was also left with officials from Magna.
In a letter to DaimlerChrysler Chairman Dieter Zetsche, Tracinda said it has been following the developments at Chrysler closely and has been studying available materials about the automaker.
“Having been a major shareholder for over a decade we are very familiar with both Chrysler and the automotive industry, and have come to believe, all factors considered, that a private ownership approach is in the best interests of all Chrysler constituencies,” said the letter, signed by Tracinda adviser Jerome York, a former Chrysler Corp. executive.