GM In Talks To Buy Chrysler - The Complete News Summary

[Perian]

Link: http://autonews.com/apps/pbcs.dll/se...55E7AFFAD348F1

March 1 2007 Magna hoardes cash with eye toward Chrysler

Fourth quarter net income plummets; dividend cut by half.

Magna International Inc. is hoarding cash as it considers a bid to buy the Chrysler group. Magna founder and Chairman Frank Stronach met twice last week with the leadership of the Canadian Auto Workers union to discuss Chrysler, CAW President Buzz Hargrove said today.

Hargrove declined to disclose details of the talks. But Hargrove said Stronach is a strong-willed executive who usually achieves the goals he sets.

More at link.



Link: http://yahoo.reuters.com/news/articl...mktNews&rpc=44

LONDON, Feb 26 (Reuters) - DaimlerChrysler AG is thinking about taking a minority stake in General Motors Corp. as payment for Chrysler if a deal between the two automakers takes place, the Financial Times said on Monday.

Such an all-share option was being weighed up by the firm, the newspaper said, citing people familiar with the situation.

Other possible options included a sale of DaimlerChrysler's struggling U.S. arm to private equity or industry investors, and a flotation of Chrysler, according to the FT.

"They are interested in who takes Chrysler over and they would be happy to take equity in GM in return," the FT quoted an unnamed leading shareholder as saying. The shareholder was citing talks with DaimlerChrysler's senior managers, it said.




Source: The Wall Street Journal 02-17-07

Shares in DaimlerChrysler AG jumped to a seven-year high on renewed speculation that General Motors Corp. could buy the company's Chrysler Group unit, a further sign that a spinoff of Chrysler has strong backing among investors.

Several people familiar with the situation said it is unlikely GM would buy Chrysler, although one person with knowledge of the matter said such a deal has been touched on in recent discussions between the two auto makers.

Detroit, New York Abuzz

The rumors created a hullabaloo in Detroit and on Wall Street. Their variety -- touching on everything from acquisition theories to a possible production alliance -- speaks to the difficulty that Daimler may have in managing the process.

GM and Chrysler are discussing joining forces to develop a large sport-utility vehicle and possibly a small car made in Korea, several people familiar with the matter said, adding that a "production deal" is the most likely scenario.

On Wall Street, the focus also turned to Detroit's labor negotiations with the United Auto Workers. As so much of the industry's future is based around this contract, the issue presents a chicken-and-egg paradox for potential buyers.

Many people discounted the idea of a spinoff, saying that it would do little to fix Chrylser's main problems of cost structure and product appeal. That said, these people pointed out that what is best for the remaining Daimler side of the company may not be best for Chrysler's side.

DaimlerChrysler investors clearly favor the idea of selling Chrysler, long the smallest of Detroit's Big Three and now even smaller than Toyota Motor Corp. in the U.S. market.

A deal linking GM, the world's largest auto maker, and Chrysler would likely face many hurdles, including antitrust questions, integration challenges and opposition from workers.

The head of the GM European Employee Forum, which represents GM workers in Europe, said Friday he doesn't believe GM would or should buy Chrysler. "Chrysler doesn't have the right products for the U.S. customer," Klaus Franz said in a telephone interview.


Link: http://us.ft.com/ftgateway/superpage...8365047&page=1

Article from: The Financial Times

By John Reed in London, Richard Milne in Frankfurt and Bernard Simon in Toronto
Friday Feb 16 2007 16:50

General Motors is in exploratory talks with Chrysler after DaimlerChrysler, its German parent, this week said it might sell the struggling US unit.

Other potential suitors for Chrysler, including car companies and private equity groups, have also expressed preliminary interest, insiders told the Financial Times on Friday.

Daimler's US shares rose as much as 6.1 per cent as rumours of the talks emerged.

The Stuttgart-based German-US company made the approach to GM through its bankers after saying it was considering "all options" for Chrysler, which lost €1.1bn ($1.4bn) last year. "Yes, we are in talks," a GM insider told the FT. "They started on Wednesday."

The talks were preliminary, and it remained unclear whether they might result in an offer to buy Chrysler, joint ventures in specific areas, or any deal at all. "We are in a very early stage," the GM official said.

People close to Daimler said there had been "lots of conversations" with several carmakers since the announcement.

"Everyone you can imagine is going to kick the tyres here," said one.

The head of a US investment bank in Germany said a number of private equity firms were in discussion with DaimlerChrysler.

It has hired JPMorgan to advise it on its options. A person involved in the talks said no substantive discussions with any potential buyer had taken place but that a range of carmakers and private equity houses were likely to be interested.

Daimler declined to comment. However, there was a feeling at the company that it did not want to be rushed into anything, and wanted to study all options in detail, from an outright sale to a Chrysler spin-off.

GM said: "We do have discussions with other carmakers with issues of mutual interest, but we won't comment on any speculation of discussions."

GM, which this year is expected to be overtaken by Japan's Toyota (NYSE:TM) as the world's biggest carmaker, last year explored then rejected the possibility of an alliance with Renault and Nissan.

Analysts expressed scepticism on Friday that GM's shareholders would support the idea of a tie-up with Chrysler, the most focused of Detroit's Big Three, at a time when both face declining sales in the world's biggest car market.

GM has not made a full car-company acquisition in its recent history, although, like other groups, it forms ad hoc alliances and joint ventures.

However, "if DaimlerChrysler really want to sell Chrysler, then Rick will have to examine what the potential advantage would be", the GM official said, referring to Rick Wagoner, chief executive.


Source: Special AN Email Alert

General Motors is in negotiations to buy the struggling Chrysler group in its entirety, say sources in Germany and the United States.

High-level talks are taking place between DaimlerChrysler AG and GM executives.

Although the two companies have discussed cooperation on a large SUV, say sources at both companies, the potential deal would go beyond limited product development alliances.

Talk of an alliance was first reported last week in Germany's Manager-Magazin.

GM spokesman Tony Cervone declined to comment on the speculation, saying, "We have always said that conversations (between GM and many other parties) have happened all the time, and many times they don't come to fruition."

A Chrysler spokesperson declined to comment. Other sources have reacted skeptically.

Asked about the possible deal, Klaus Franz, GM's top union official in Europe, said acquiring Chrysler would be a "disaster" for the automaker. Franz is vice chairman of the supervisory board at GM Europe's Opel division, based in Germany.

"This is only a step to remain the number-one automaker. The problem is that Chrysler is in the same situation as GM. They don't have the right product portfolio," Franz told Automotive News Europe.

"This would be comparable to GM's alliance with Fiat. And GM lost a lot of money with that decision. I hope GM learned its lesson."

Roman Mathyssek, an analyst for Global Insight in London, also is skeptical of a purchase: "At the end of the day, if they were really to do that, that would not be a cheap option for DaimlerChrysler at the moment. It would be a lot more effective for the DaimlerChrysler group to look at how they can continue their cooperation."

Last week, uncertainty over Chrysler's future increased as DaimlerChrysler CEO Dieter Zetsche said the company was open to all options for the Chrysler group, including a sale.

"All options are on the table," Zetsche said.

Chrysler unveiled a restructuring plan as it posted a $1.4 billion (1.1 billion euro) loss for 2006. That plan calls for cutting 13,000 jobs in North America by 2009.

According to media reports, DaimlerChrysler retained JPMorgan Chase & Co. to consider options for the Chrysler group.

DaimlerChrysler revealed its latest restructuring plan for Chrysler almost six years to the day after its first attempt at shoring up profits. Zetsche ran Chrysler until taking the top spot in Stuttgart last year.

Although growing ranks of shareholders would like to see Chrysler go, selling it is easier said than done. In Cologne, Germany, Bank Sal. Oppenheim analyst Michael Raab estimates it would cost $34 billion to separate the two businesses.

Analysts say a real stumbling block is the roughly $23.6 billion in unfunded pensions and health care liabilities for retirees that any buyer would want financed in full.

[Perian]

Holy cow.

REMEMBER EVERYONE: IT ALL COMES DOWN TO THE PRICE TAG...

GM may be in the back of the "DCX STORE" looking at the 50% off merchandise.

The one question: How bad does DCX want to rid itself of Chrysler?

GM could walk away with the company at no charge if it simply assumes Chrysler's current debt.

About those unfunded pension liabilities however...

[mkaresh]

Holy product line redundancy Batman!

Or...how to go quickly from zero mainstream RWD platforms to two. Would LY still happen?

GM would get a more up-to-date midsize SUV platform, but that's of limited benefit right now.

And they'd get a slew of underwhelming small and midsize cars.

[TiburonJT]

Wow. I wasn't expecting this to happen.

I don't think GM needs to deal with another company's mess in the middle of its own turnaround. Besides, it doesn't seem like GM would gain much, but it could be risking a lot.

[New_Mexico_Sunset_on_Rt66]

No mention at all on CNN.Money.com, and I would think they would break this story.

[CobaltSScrazy]

not going to happen. too much unfunded healthcare, wrong product portfolio, and where is GM's benefit? Trucks, ...no. Cars, NO!!!! Ok so we'd get minivan's out of the deal, use of the HEMI name (although the LS is a superior engine), and might NOT even get the jeep brand. Vans and Jeep would be the only two things I'd want from Chrysler, then you could do Jeeps/Hummers together in RD/pricing/design and we'd get minivan sales and could do a Chevy clone.

I don't see this happening, not by a LONG shot, title is a little misleading. It makes it sound like its probable, when its just an idea. In my opinion.

CobaltSScrazy

[mkaresh]

One thing I just remembered is that Lasorda used to be a GM exec. So he knows GM's top execs well. No doubt a good position for him in the combined organization would be part of the deal.

[Pontiacwheels]

Isn't the UAW agreement up this year? I'd expect the unfunded liabilities would get reduced in any agreement.

Eliminating the weakest cars in different segments for both companies could end up with a decent product line.

[GReekBoy]

sweett...now gm can ditch the duramax and get the cummins!!! not that i have anything against the duramax, its a great engine but you cant beat a cummins

[genjy]

Originally Posted by CobaltSScrazy

not going to happen. too much unfunded healthcare, wrong product portfolio, and where is GM's benefit? Trucks, ...no. Cars, NO!!!! Ok so we'd get minivan's out of the deal, use of the HEMI name (although the LS is a superior engine), and might NOT even get the jeep brand. Vans and Jeep would be the only two things I'd want from Chrysler, then you could do Jeeps/Hummers together in RD/pricing/design and we'd get minivan sales and could do a Chevy clone.

I don't see this happening, not by a LONG shot, title is a little misleading. It makes it sound like its probable, when its just an idea. In my opinion.

CobaltSScrazy

You need to pay more attention because Chrysler just released this fantastic looking premium car named the Chrysler Sebring:



Imagine that as a stylish Saturn sedan or the Pontiac G7. It's going to be awesome.

[CountryME]

Originally Posted by CobaltSScrazy

not going to happen. too much unfunded healthcare, wrong product portfolio, and where is GM's benefit? Trucks, ...no. Cars, NO!!!! Ok so we'd get minivan's out of the deal, use of the HEMI name (although the LS is a superior engine), and might NOT even get the jeep brand. Vans and Jeep would be the only two things I'd want from Chrysler, then you could do Jeeps/Hummers together in RD/pricing/design and we'd get minivan sales and could do a Chevy clone.

I don't see this happening, not by a LONG shot, title is a little misleading. It makes it sound like its probable, when its just an idea. In my opinion.

CobaltSScrazy

Ding, Ding, Ding......Minivans are the answer Bob. Tell him what he has won. GM gets a newly designed minivan without ponying up the development dough. Anyone remember that GM just killed it's minians. This would fill a gaping hole for those who don't want a Lamda.

[ohmywrd8]

I hope they don't buy Chrysler. Ughh... I hope they don't.

[coaster.n3rd]

Originally Posted by mkaresh

One thing I just remembered is that Lasorda used to be a GM exec. So he knows GM's top execs well. No doubt a good position for him in the combined organization would be part of the deal.

And Lutz was at DCX for some time.

[rsbaker]

Originally Posted by genjy

You need to pay more attention because Chrysler just released this fantastic looking premium car named the Chrysler Sebring:



Imagine that as a stylish Saturn sedan or the Pontiac G7. It's going to be awesome.

I'm afraid I dis-agree! I've always thought the New Sebring Sedan looked like a tarted up Saturn Ion Sedan.

[paul38469]

Originally Posted by CountryME

Ding, Ding, Ding......Minivans are the answer Bob. Tell him what he has won. GM gets a newly designed minivan without ponying up the development dough. Anyone remember that GM just killed it's minians. This would fill a gaping hole for those who don't want a Lamda.

Yes, and instead of costing a half billion or so to develop one from the Lambda platform...assuming DCX GIVES Chrysler to GM for free, it will mean it will only cost GM $ 23.6 billion in unfunded pensions and health care liabilities to get that minivan in a declining minivan market. What a steal!