Image: DaimlerChrysler's CEO Zetsche
Arnd Wiegmann  /  Reuters
DaimlerChrysler's CEO Dieter Zetsche acknowledged for the first time on Wednesday it is talking with prospective buyers of its loss-making Chrysler unit.
updated 4/4/2007 9:14:12 PM ET 2007-04-05T01:14:12

Shareholders of DaimlerChrysler AG had hoped for a decision on the sale of the money-losing Chrysler unit, or at least news on when that might happen — but got neither Wednesday at a meeting marked by simmering tension over the automaker’s future.

The company’s board would acknowledge only that an outright sale was among the options being considered — despite an ongoing recovery plan to stem losses, cut 13,000 North American jobs and pare back production.

“As announced on Feb. 14, we are open to all options for future collaboration with Chrysler,” Chairman Dieter Zetsche told some 7,900 shareholders crammed inside Berlin’s exhibition center. “The statement is still true today.”

He said that the talks had been with “potential partners who have shown a clear interest” and “so far, I am satisfied with the process. Everything is going according to plan.”

However, he would not say with whom the world’s fifth-largest automaker had been talking.

Shareholders — many of whom have criticized from the start the 1998 merger of Daimler-Benz and Chrysler Corp. in a $36 billion deal — were agitated about the lack of updates. DaimlerChrysler shares closed down more than 1.4 percent in Frankfurt at 61.10 euros ($81.65).

Zetsche’s remarks “confirmed what we already knew,” said Stephen Cheetham, research analyst for European autos with Sanford C. Bernstein Ltd. in London.

Ford Chief Executive Alan Mulally, asked at New York International Auto Show about how a Chrysler sale would affect his company, appeared to dismiss any notion of a tie-up with Chrysler.

“My real thought is we go through the same thing at Ford — are there opportunities to link up with anybody else and we all came to the conclusion, pretty clearly, that the best thing we could do for long-term value creation is to focus on creating an even more viable Ford,” he said. “I just haven’t seen ... very many mergers or alliances or divestitures and regroupings that’s created any value worldwide.”

Zetsche urged patience, noting that the situation is complex and pledged that DaimlerChrysler would act in the best interests of the company, shareholders and workers.

“I know that many of you would like to have a progress report at this time,” he said. “That’s why I’d like to explain why we’re unable to say more at this point and why we decided to examine all the options.”

That failed to mollify shareholders, some of who clamored that the future of one of Germany’s most famous brands was at stake.

“You can do the job yourself or a financial investor will come along and do the job for you,” said Hans-Richard Schmitz, who spoke on behalf of the shareholder advocate group DSW. He contended that, by holding onto Chrysler, the entire company could become a takeover target.

Another shareholder, Henning Gebhardt — the head of German equities at DWS, the fund management group for Deutsche Bank — said he appreciated the need for diligence, but worried that the ultimate price could be too high.

“If Chrysler is finally led before the divorce court judge, we would be very grateful,” he said. “But what will happen if you don’t find a new groom or if he demands an inappropriately high dowry?”

Gebhardt’s reference to divorce was apt given that former Chairman Juergen Schrempp, who presided over the merger, had called it a marriage made in automobile heaven.

Chrysler has struggled as American buyers have flocked to more fuel-efficient vehicles.

“The crucial factor was the unforeseeable shift in demand to smaller, more fuel-efficient vehicles which was triggered by increased gas prices in the U.S.,” Zetsche said.

The final straw for the marriage may have been the U.S. unit’s operating loss last year of $1.5 billion.

In a first tacit admission that a sale was being explored, Zetsche said in February that all options regarding the unit were on the table.

Since then, at least three groups reportedly have expressed interest in Auburn Hills, Michigan-based Chrysler, including Canadian auto-parts supplier Magna International Inc., which has reportedly submitted a bid to buy the business for as much as $4.7 billion.

Cerberus Capital Management LLC and a consortium of investors led by Blackstone Group each have reviewed Chrysler’s finances and are expected to make bids.

The Detroit News, citing people close to the talks, reported on its Web site that all three had submitted formal bids to DaimlerChrysler, with a decision to be made on the bids by the end of April. The automaker did not comment on the report.

No matter when Chrysler is sold, Daimler is unlikely to make back what it paid. Analysts have valued the unit at between nothing and $13.7 billion.

Members of the Canadian Auto Workers, the United Auto Workers of the U.S. and German unions met Tuesday night for more than three hours to plan their strategies. They reiterated that Chrysler should not be sold — and that if it is, any deal should not lead to major job cuts.

The unions will play a vital role in any deal because their representatives account for half of the seats on DaimlerChrysler’s supervisory board, the U.S. equivalent of a board of directors.

In other business, the board elected Manfred Bischoff as its new chairman to replace Hilmar Kopper, who held the same position for 17 years.

Kopper stepped down from the board, and shareholders selected Clemens Borsig, the chairman of Deutsche Bank AG’s supervisory board, to replace him.

Shareholders also approved a 2006 dividend of 2 euros ($2.67) a share that will be paid April 5.

© 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Discuss:

Discussion comments

,

Most active discussions

  1. votes comments
  2. votes comments
  3. votes comments
  4. votes comments

Data: Latest rates in the US

Home equity rates View rates in your area
Home equity type Today +/- Chart
$30K HELOC FICO 2.78%
$30K home equity loan FICO 5.78%
$75K home equity loan FICO 4.54%
Credit card rates View more rates
Card type Today +/- Last Week
Low Interest Cards 13.57%
13.57%
Cash Back Cards 17.91%
17.91%
Rewards Cards 17.15%
17.15%
Source: Bankrate.com