Thursday, April 19, 2007

Chrysler sale could be wrapped up by May: source

FRANKFURT (Reuters) - DaimlerChrysler could wrap up a sale of its ailing U.S. arm Chrysler as early as next month, a source familiar with the situation said on Thursday.

Corporate strategy chief Ruediger Grube was in New York for talks with potential buyers, the source told Reuters, adding that a deal in May was likely but not definite.

The source said the talks would not produce a deal in time to present it to the carmaker's supervisory board this month. "This will take some time. There are a lot of aspects to take into account," he said.

German workers' representatives on the carmaker's supervisory board are not opposed in principle to selling Chrysler as long as the buyer agrees to protect as many jobs as possible, sources familiar with the board's thinking said.

That contrasts with comments on Wednesday by Ron Gettelfinger, head of the powerful U.S. United Auto Workers union, that the UAW opposed any sale of Chrysler and enjoyed lots of support from the supervisory board, of which he is a member.

"We have always said we want a solution that preserves jobs, both here and there. We have never favored any particular option" on what to do with Chrysler, one person said.


Sources have told Reuters that bidders for Chrysler include private-equity firms Cerberus Capital Management , Blackstone Group and Canadian auto parts maker Magna International Inc .

Billionaire Kirk Kerkorian has also made a $4.5 billion bid.

Gettelfinger, who told reporters on Wednesday he has met potential Chrysler buyers, said the UAW was opposed to any bid from "strip-and-flip" investors, using a pejorative reference for leveraged-buyout firms.

"I am very concerned about equity companies moving more and more into the industry," he said. "They are hovering overhead right now."

One source close to the carmaker said the board would not necessarily block an offer from a private-equity investor as long as the buyer guaranteed jobs at Chrysler.

"I don't think you can say every private-equity firm is a devil. There are some that act in a way that we reject and others that are all right," the source said.

Rival U.S. carmaker General Motors , on the other hand, never stood a chance to buy Chrysler because workers' representatives knew such a purchase would have triggered mass layoffs, the source said.

DaimlerChrysler Chief Executive Dieter Zetsche said in February all options were open for Chrysler, which lost nearly $1.5 billion in 2006 as buyers shifted away from the light trucks and sport utility vehicles that generated two-thirds of its total sales.

Chrysler plans to cut 13,000 jobs as it seeks to return to profitability by 2008.

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