Annual meeting shows Daimler-Chrysler split


April 05, 2007|By New York Times News Service

BERLIN -- DaimlerChrysler AG insists it is keeping all options open for the future of the Chrysler Group. But judging by its tense annual meeting here yesterday, Daimler's marriage to Chrysler is already finished, except for the ink on the divorce papers.

Trying to placate restive shareholders, DaimlerChrysler confirmed for the first time that it was in negotiations with a number of bidders about a deal for the troubled American unit, which lost $1.5 billion last year.

"We are talking with some of the potential partners who have shown a clear interest," the chief executive, Dieter Zetsche, said. "So far, I am satisfied with the process. Everything is going according to plan."

Zetsche did not identify the suitors, nor did he guarantee that the talks would end in a sale. "We need to keep all options open," he said. "We need to keep maximum scope for maneuver."

Still, the deal-making machinery is turning. People involved in the process said three bidders submitted preliminary offers for Chrysler on Friday: two private equity firms - the Blackstone Group and Cerberus Capital Management - and a Canadian auto parts supplier, Magna International.

DaimlerChrysler's confirmation of the discussions was hardly a surprise. The auto industry on both sides of the Atlantic has crackled with rumors about would-be bidders for Chrysler since mid-February, when Zetsche disclosed in Michigan that the company was thinking anew about the future of its American outpost.

But the latest disclosure is likely to add momentum for a deal. Daimler shares have soared nearly 25 percent since the company put Chrysler into play, and they dipped 1.4 percent yesterday only because investors were frustrated that Zetsche did not offer more details.

"This marriage made in heaven turned out to be a complete failure," said Hans-Richard Schmitz, one of a long line of investors who condemned the 1998 merger and called for a quick sale of Chrysler. "What's missing now is a swift resolution of the issue by the management of the group," said Schmitz, who represents the German Association for the Protection of Shareholders.

If DaimlerChrysler does not get rid of Chrysler soon, he warned, it could become a takeover target itself. "I don't understand why you're so hesitant, Dr. Zetsche," Schmitz said. "You can do the job yourself, or a financial investor will come along and do the job for you."

As DaimlerChrysler's fortunes have frayed, these annual meetings have become a collective exercise in anger management. Between plates of sausage and dumplings, the 8,000 or so shareholders applaud heartily as their representatives lash the management for its unmet promises.

But with Chrysler's future in flux, this meeting had a subtly different tone. This time, shareholders tried to press the company into going through with a sale rather than simply criticizing management failings.

"Were Chrysler finally to be led before a divorce court judge, we would be very thankful," said Henning Gebhardt, head of German equities at DWS, the fund management arm of Deutsche Bank.

Among the proposals at yesterday's meeting was one that would force DaimlerChrysler to change its name back to Daimler-Benz if it does not get rid of Chrysler by March 31, 2008.

"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," said the proposal, submitted by two shareholders, Leonhard Knoll and Ekkehard Wenger, who delivered a spirited case against the existing name.

The proposal was defeated in a shareholder vote.

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