Thursday, April 05, 2007

Shareholders urge Chrysler sell-off

Shareholders urge Chrysler sell-off
By Richard Milne in Berlin
Copyright The Financial Times Limited 2007
Published: April 4 2007 13:49 | Last updated: April 4 2007 13:49

Shareholders urged DaimlerChrysler on Wednesday to dump its Chrysler unit as the German-US carmaker for the first time officially confirmed it was in talks over a sale.

Discussion over a possible sale of US carmaker Chrysler dominated a relatively low-key annual meeting for Daimler as most large investors stayed away.

Henning Gebhardt, head of German equities at DWS, the country’s largest fund manager, and the only big investor present, said: “If Chrysler is finally led before the divorce judge, then we would be very happy. But what happens if you don’t find a new bridegroom or if he demands an inappropriately high dowry?”

Hans-Richard Schmitz of DSW, a small shareholders’ association, turned Daimler’s initial boast about the 1998 merger back on itself: “This ‘marriage in heaven’ turned out to be a complete failure. Billions of shareholders’ money has been wasted.”

He added that the 30 per cent rise in Daimler’s share price in the last six weeks showed “investors have cast their vote” for a sale.

Dieter Zetsche, Daimler’s chief executive, bought time from shareholders but also put pressure on himself when he announced in mid-February that Daimler would look at “all options” for the future of Chrysler.

On Wednesday he added for the first time that talks were taking place.

“I can confirm that we are talking with some of the potential partners who have shown a clear interest ... So far I am satisfied with the process. Everything is going according to plan,” he said, underlining that all options including keeping Chrysler were open.

Three bidders are thought to have placed an indicative offer last week: supplier Magna International, buy-out group Cerberus and a grouping of private equity firms Blackstone and Centerbridge. People involved in the negotiations believe an exclusive bidder will be chosen by the end of this month but that talks will last probably until the summer.

Mr Zetsche said any decision on Chrysler’s future had to be the best solution for both companies as well as workers and customers. This suggests that not only price will play a role in the potential sale but also how putative buyers want to develop the business and deal with the sensitive issues of trade unions and healthcare liabilities.

Daimler’s annual meeting was also characterised by a number of controversial counter-motions, which attracted some attention although they have little chance of success. They included calls for a change in the company’s name to Daimler-Benz AG, a moving of the meeting to Daimler’s home town of Stuttgart and a special audit into the Chrysler deal.


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