Jean Jennings VileBlog March 14 2007 Chrysler for sale

#Chrysler

It's an amusing exercise to examine the top contenders considering the purchase of Chrysler.

DaimlerChrysler-also known in crabbier German shareholder circles as DaimlerCrisis-is well along the path to Splitsville after nine years of togetherness and a nasty public Valentine's Day kiss-off from DCX chief exec Dieter Zetsche, who said that "all options" were being considered for Chrysler. Yikes.

We've made it past the absurd rumor that the only-just-yesterday-beleagured General Motors was interested, and are nearly past the horror that GM was indeed examining the financial benefits of gathering Chrysler to its massive bosom. (That would have been one fairly messy and expensive way to keep the Chinese out of town for a few more years.) The dust has cleared and a handful of pretty impressive parties are left standing, checkbooks in hand. This is not to say that Dr. Z will actually part with the company he says is now part of his blood. "There will be no auction," he back-pedalled in; Geneva last week. Still, it is an amusing exercise to examine the top contenders.

Canadian firm Magna International, the world's third-largest supplier to the car industry, does 26% of its business with Chrysler and has entered the fray for self-preservation reasons. Buying Chrysler would protect Magna jobs, but it would also protect the prices it charges for parts. Not that it wouldn't mind losing to a good, strong private equity offer, which seems more likely. There are two biggies in the hunt.

Blackstone Group is the 1000-pound gorilla, number one on Fortune Magazine's list of the top ten private equity groups. It has its tentacles in more than 100 companies and is the majority shareholder of TRW, having bought and sold a chunk of American Axle.

A mighty rival is Cerberus Capital Management (currently duking it out to buy bankrupt Delphi), ninth on Fortune's top ten list. If the well-sourced rumors are true, Cerberus's advantage is in hiring Zetsche's onetime-right-hand man, Wolfgang Bernhard as a consultant. Volkswagen (and Mercedes-Benz) reject Wolfie might just ride back in to take over Chrysler yet.

Is that a good thing? If he had as much to do with the current lineup at Chrysler as it seems, perhaps not.

Be that as it may, both Cerberus and Blackstone have reportedly valued Chrysler in the; $5 billion range-a precipitous drop from the $38 billion Daimler paid less than a decade ago. Magna is said to have valued it at a substantially lower $4 billion, but could possibly end up as a minority partner of the winning bidder, with a 10 to 30% stake and the role of running manufacturing.

Meanwhile, two German shareholders are insisting that the Chrysler name be separated from the current corporate moniker by March 31, 2008, whether or not Chrysler is sold off, writing in a letter that will be presented at the April 4 annual shareholders meeting, "Maintaining a corporate name that evokes associations with the failure of the business combination with Chrysler is detrimental to the image of the corporation and its products."

Ho, ho, ho! That would be the same corporation whose vaunted products got not one single solitary recommendation from the April car-buying issue of Consumer Reports.

These are exciting times.

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