Date registered: Jan 2005
Vehicle: 1992 W126 300 SE
Location: Head in the clouds
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From The Times
February 15, 2007
Chrysler’s future on the line as Daimler ‘looks at all options’
Christine Buckley and James Doran
DaimlerChrysler is considering whether it should split off Chrysler in what would be a dramatic unravelling of the merger created nine years ago.
The group said yesterday that it was considering all options for its loss-making US arm, which is believed to be worth about €10 billion (£6.7 billion). Dieter Zetsche, DaimlerChrysler chief executive, put the future of Chrysler on the line as the carmaker announced 13,000 job losses in the US and Canada and the closure of an assembly plant and a parts business. The job cuts amount to 16 per cent of the global workforce after Chrysler last year plunged to a €1.1 billion loss from a profit of €1.5 billion in 2005.
The company said it had begun talks with partners about the future of Chrysler. Mr Zetsche said: “In this regard we do not exclude any option in order to find the best solution for both the Chrysler Group and DaimlerChrysler.” The carmaker has hired JPMorgan for advice. It has been reported that early talks had started with General Motors, with analysts believing that a stake sale could be the most likely route. American private equity groups are also believed to be interested.
Philip Watkins, an analyst with Commerzbank, believes that Chrysler could have an enterprise value of €10 billion and that the group would have to sell at least 25 per cent.
Ron Gettelfinger, president of the United Auto Workers, said: “Today’s action by DaimlerChrysler is devastating news for thousands of workers, their families and their communities.” Mr Gettelfinger said the union would do all it could to make sure those members fired in the latest cuts would be paid a fair severance package.
The uncertainty over Chrysler comes after the group gave an assurance last October that it was not for sale. Mr Zetsche said: “At that time, there were no other options for the group and therefore at that time we had to stop speculation.”
The restructuring plan for Chrysler involves closing the assembly plant in Newark, Delaware and a parts distributor near Cleveland, and cutting back shifts in other plants.
A separation of Chrysler from its German parent would mark the end of a merger that has been dogged by controversy, including shareholder challenges and the sacking of the former chief executive problems over quality at Mercedes.
Mr Watkins said that selling a stake to GM could make sense because it would reduce competition in the tough North American market. But some Wall Street bankers are more optimistic that Chrysler will remain in the merger and will recover with a new range of models.
DaimlerChrysler’s profits edged up to €5.5 billion, from €5.2 billion the previous year, after a good performance in Germany.
Last edited by deathrattle; 02-14-2007 at 06:30 PM.