Kerkorian Offers $4.5 Billion For Chrysler

April 5, 2007
Kerkorian said he would offer an equity partnership to the United Auto Workers and senior management of Chrysler.

Billionaire investor Kirk Kerkorian's investment group said April 5 it had offered DaimlerChrysler$ 4.5 billion dollars to buy its struggling Chrysler unit. Kerkorian's personal holding company Tracinda Corp. said in a statement the offer would aim to "build and strengthen Chrysler as an independent entity."

The casino mogul, who failed in his 1995 hostile takeover bid of Chrysler, said his firm would offer an equity partnership to the United Auto Workers and senior management of Chrysler as a means of gaining their commitment to a long-term solution. "Tracinda believes by taking a long-term approach to solving Chrysler's problems, it can become a robust and lasting, stand-alone entity," the statement added.

The all-cash offer is subject to reaching a "new satisfactory collective bargaining agreement with the United Auto Workers Union" and a due diligence period which Tracinda estimated would take 60 days, a letter to DaimlerChrysler released by Tracinda stated.

A DaimlerChrysler spokesman declined to comment on the Tracinda bid but reiterated chairman Dieter Zetsche's statements on April 4 confirming that the company is in talks with interested third parties and that "all options" are on the table. A representative from the United Auto Workers was not immediately available for comment.

The daily Detroit News reported that only three candidates had submitted a firm offer by last week, private equity firms Cerberus and Blackstone, and Canadian car parts maker Magna, which is also likely to team up with an investment fund. The newspaper said DaimlerChrysler aimed to start exclusive talks with a potential buyer by the end of this month, and hoped to raise around $8 billion from the sale.

Tracinda representative Jerry York said it would take five to seven years to rebuild Chrysler by shifting the product mix towards "greener" segments, improving product quality to eliminate a consumer bias towards Asian products and speeding up the introduction of new models in order to compete with Asian automakers.

Kerkorian, who last made headlines with his failed bid to push General Motors Corp. into an alliance with Renault-Nissan, opposed the 1998 merger of DaimlerBenz and Chrysler and launched a lawsuit trying to recover billions in damages after he said the companies misled investors about the nature of the deal.

Copyright Agence France-Presse, 2007

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