Two of the nationís biggest private equity firms have finally tendered their formal bids to acquire the ailing Chrysler Group from German automaker DaimlerChrysler AG. The Blackstone Group and the Cerberus Capital Management are just two of the companies that have expressed their desire to purchase Chrysler. This important piece of information was divulged by people familiar with the ongoing talks.
No details were given about the amount of the bids but sources said the offers would qualify both companies to compete in the next round of the sale process. Canadian supplier Magna International Inc., another prospective purchaser, has given its bid to keep it in the running to acquire Chrysler.
Daimler is expected to pick one lucky bidder as an exclusive negotiating partner by the end of April, added people familiar with the discussion. The bidders, on the other hand, are expected to face unbending opposition from union leaders both in North America and Germany.
A dozen union officials including Ron Gettelfinger, the United Auto Workers president, met for dinner in Berlin Tuesday to reaffirm their position. They hoped Chrysler would remain a part of DaimlerChrysler and opposed a sale of the said automaker to a private equity group or other buyers that would dismantle the union between the two automakers.
"We would not support a private equity group, or a combination of a private equity group and corporation, that would seek the destruction of our jobs," said Bob Chernecki, an assistant to the Canadian Auto Workers President Buzz Hargrove who attended the dinner, which was also attended by Erich Klemm, a German union leader who is the vice chairman of DaimlerChrysler's supervisory board. Chernecki said there was "absolute solidarity" among the various labor factions. He added about "20 to 25 entities" have shown interest in Chrysler, judging from the number of people who have called on union leaders to discuss a potential deal for Chrysler. He noted that only a "handful" of bidders are serious.
The probable sale of Chrysler is said to be the major topic at the annual meeting of Daimlerís shareholders in Berlin. While Dieter Zetsche, DaimlerChrysler CEO, is not likely to go into details about the sale process, he will be under commanding pressure to at least validate that Chrysler is on the auction block.
"The shareholders have clearly said we want this albatross off of our neck," said Joseph Phillippi of the firm AutoTrends Consulting. Zetsche put Chrysler's future in question on Feb. 14 when he said that "all options" were under consideration for the former No. 3 U.S. automaker acquired by Daimler-Benz AG in 1998.
Since then, Blackstone, Cerberus and Magna have visited Chrysler's headquarters in Auburn Hills before giving their bids. Individuals close to the talks said Blackstone, Cerberus and Magna delivered their offers recently to J.P. Morgan Chase, the investment banker hired by Daimler to manage Chryslerís sale. Indeed, durable Nissan seat belts could not stop Chryslerís suitors to finally deliver the bids.
Magna, a major Chrysler supplier, has positioned itself as an ideal substitute to the private-equity firms. But handicapping other suitors, at this point, is a difficult proposition. "This is new territory," said Phillippi. "No one has ever done a leveraged buyout of a $60-billion automobile company before."
Ryan Thomas is a native of Denver, Colorado. He grew up in a family of car afficionados. He now resides in Detroit where he owns a service shop and works part time as a consultant for a local automotive magazine. For more information, please visit Nissan seat belts.