Billionaire investor Kirk Kerkorian, almost 10 years after his failed first attempt to buy Chrysler, reentered the fray yesterday and offered to pay $4.5 billion to buy the struggling automaker from DaimlerChrysler, which paid almost $40 billion for it in 1998. The 89-year-old Kerkorian, once Chrysler’s largest shareholder, said in a letter from his investment company Tracinda Corp. to DaimlerChrysler that the offer is contingent on Chrysler working out a favorable labor contract with the United Auto Workers union.
It was the first publicly disclosed bid for Chrysler and sent DaimlerChrysler’s US-listed shares up almost 5%. The move is also Kerkorian’s second major power play at a US automaker in the past two years. He previously owned as much as 9.9% of General Motors Corp., but sold that stake last year following the automaker’s rejection of his proposed tie-up with Nissan Motor Co. and Renault SA. Kerkorian told DaimlerChrysler that he was willing to put down a $100 million deposit as a sign of good faith. DaimlerChrysler spokesman Thomas Froehlich said „all options are open,” but declined to comment specifically on Tracinda’s offer.
The letter said it would offer the UAW and Chrysler management the opportunity to participate as equity partners in the deal. Erich Merkle, an analyst with IRN, said the $4.5 billion offer sounded low, although the company faces many challenges. „I think Chrysler can probably fetch some place higher than, say, $5 billion,” Merkle said, but added that it was „really damaged merchandise” right now.
DaimlerChrysler’s US Big Board shares rose $3.93 to $84.49, their highest point since July 1999. In the past year, the shares have traded as low as $45.98, which it hit last July. Sources close to the situation have told Reuters that private equity groups Cerberus Capital Management and Blackstone Group, plus Canadian car parts group Magna International Inc. are all possible candidates to take over Chrysler. (reuters.com)
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