J.P. Morgan reportedly is set to launch Chrysler auction

[renovation]

If GM buys or its sold off it will be a major hurt for a large part of the United States and Canada just in the forum of jobs loss!

LONDON (MarketWatch) -- DaimlerChrysler is set to launch an auction for its Chrysler unit as early as this week by sending information on the struggling division to several potential bidders, according to a published report.

The Times of London reported on its Web site Monday that the car company's adviser, J.P. Morgan, will provide interested parties with private information, such as data on current trading, as part of the auction.

The value of any deal remains unclear, though analysts at Citigroup suggested investors might be happy with a "clean break" from the division, with no money changing hands but health-care liabilities passing to the new owner.

http://custom.marketwatch.com/custom/excite-com/news-story.asp?guid={E567B891-0CAF-4667-B719-7759BA6716E4}

[johnnymk]

I tought that buyouts happened within the stock market arena.

[Napoleon54]

I bid $5!

[Markel]

The New Chrysler, a Golden Palace company.

[Jeffbx]

Think they'll list it as a 'Buy it Now' on ebay?

[johnnymk]

http://www.nytimes.com/2007/02/20/business/20chrysler.html?_r=1&th&emc=th&oref=slogin

Many Are Eager to See Data on Chrysler


FRANKFURT, Feb. 19 — Not since Jürgen E. Schrempp announced that he was stepping down 18 months ago has there been this much interest in DaimlerChrysler stock.

American and foreign auto companies, private equity groups and investment banks are eager to inspect the struggling company’s financial data.

“Everybody will take a look,” a senior executive at a global car company said Monday night. He spoke on condition of anonymity because his company is among those expecting to obtain the information.

Shares of DaimlerChrysler rose in European trading Monday for a fifth straight session and have gained 5.5 percent since the company said Wednesday that it was keeping “all options open” for the future of Chrysler.

The last time DaimlerChrysler’s stock received as big a lift was in July 2005 when the company announced that Mr. Schrempp, the architect of the 1998 merger of Daimler-Benz and the Chrysler Corporation, would step down as chairman two years ahead of schedule. Dieter Zetsche succeeded him in 2006.

The prospect that DaimlerChrysler might now unwind Mr. Schrempp’s landmark deal has particularly cheered German investors, who hold the bulk of shares of DaimlerChrysler.

“The Germans are pushing it; there’s no question about that,” said David E. Cole, chairman of the Center for Automotive Research in Ann Arbor, Mich. “They see this as an opportunity to cleanse the parent organization.”

Thus far, attention in the market has focused on DaimlerChrysler’s negotiations with the General Motors Corporation, which is said to have opened talks two months ago on a possible deal for Chrysler.

Officials at G.M. and DaimlerChrysler declined to comment Monday on a report in The Detroit News that said the chief executives and chief financial officers of the two companies have held several serious talks since December.

“We have discussions with other carmakers all the time about possible partnerships,” said Tom Wilkinson, a spokesman for G.M. in Detroit. “A lot of time those discussions don’t lead anywhere.”

JPMorgan Chase is preparing an investment book to circulate to potential bidders, bankers with direct knowledge of its actions said Monday. Other major banks are jostling to advise would-be suitors.

Analysts and investment bankers said several European carmakers, including Renault and PSA Peugeot-Citroën of France, might also be suitors for all or part of Chrysler. Each has been absent from the American market for more than 15 years.

“The French are excluded from North America, which is a third of the world market,” said Garel Rhys, director of the Center for Automotive Industry Research at Cardiff University in Wales. “Chrysler is not a top-end brand, but it would give them entree into the U.S.”

Renault’s chief executive, Carlos Ghosn, has yearned for a greater American presence and recently pursued fruitless talks to fold G.M. into his alliance of Renault and Nissan of Japan. Both those companies are expected to receive the Chrysler offer book, although it was far from clear whether either one would make a bid. Along with them, analysts said Volkswagen of Germany and Chinese carmakers might also be interested.

So might private equity investors like Cerberus, which bought half of G.M.’s financing operations and has proposed investing in its bankrupt former parts unit, the Delphi Corporation. But another private equity investor, Wilbur Ross, the venture capitalist who has snapped up a series of auto parts companies, said Monday that he is not interested.

Some analysts and people with ties to DaimlerChrysler sounded a more cautious note. For one, they said, disposing of Chrysler in its current straits might end up being one of the greatest fire sales ever.

In a research report, Morgan Stanley estimated the division would fetch $6.5 billion, including its pension and health care liabilities, or only about a sixth the $36 billion that Daimler-Benz paid for Chrysler.

That price would be barely 10 percent of Chrysler’s annual sales, making it the “cheapest car company in the world,” the Morgan Stanley report said. The figure also suggests DaimlerChrysler would have to take a whopping write-down on its investment.

Moreover, analysts noted, DaimlerChrysler has spent years squeezing synergies from the merger through joint auto-parts purchasing deals for Chrysler and Mercedes-Benz. Those advantages are considerable, analysts said.

And Daimler minus Chrysler would face the same long-term questions about its viability in the global auto industry as other medium-size, stand-alone competitors, like its German luxury rival, BMW.

“As a carmaker, Daimler would become the smallest of the stand-alone operators in Germany, given that Porsche is likely to do something with Volkswagen,” Mr. Rhys said. “BMW has survived, but because of the rip-roaring success of the Mini, which Daimler doesn’t have.”

In any case, Mr. Zetsche has not given up hope of fixing Chrysler, which he ran from 2000 to 2005, said a former senior DaimlerChrysler executive.

“A dual-track approach would make the most sense: saying they are open to all options while trying to fix it,” said the former executive, who spoke on condition of anonymity because the talks were private.

The disclosure of talks to sell Chrysler, analysts said, might also be aimed at the unions at both DaimlerChrysler and G.M. The prospect of a sale to G.M., or a partial acquisition that might require sweeping layoffs, could provide a bargaining advantage for the companies, they said.

Mr. Ross sees it otherwise: “Whoever buys Chrysler is going to have to make some kind of peace with the unions,” he said.

In any event, taking on all or part of Chrysler would be a major risk for G.M., which has made progress in its turnaround effort since losing $10.6 billion in 2005.

“It would seem to me that they could mess that up if they got into any kind of an acquisition with Chrysler,” Mr. Cole said.

[dsuds]

The whole selling of Chrysler doesn't surprise me. But it does disappoint me because Chrysler is finally producing cars that at least LOOK interesting.

The problems however were 2-fold.

Poor fuel economy. Like many other manufacturers, when gas prices were down, designed several large, fuel hungry vehicles. I think Chrysler probably had a larger percentage of its vehicles designed during this time than GM or Ford, so they took the biggest hit.
Reliability. The Neon, their economy offering, is a reliability turd. Designing a car to only last 60-80k miles is damned irresponsible, and a sure way to lose repeat business. I own a '02 Caravan that at 60k miles rattles more than my '89 Toyota Pickup, which has been received rough treatment for 180k miles. My Caravan is very practical, comfortable, and reasonably economical (especially considering it's size). It's a vehicle that I really want to like, but can't because it just isn't built to last, and that's a damn shame.