DaimlerChrysler stock hits high on buyout talk
By Tom Krisher
Associated Press
DETROIT — Shares of DaimlerChrysler AG pushed to a new 52-week high yesterday as speculation swirled that a Canadian auto supplier and a private equity partner would bid for Chrysler, the German company's ailing U.S. arm.
KeyBanc Capital Markets analyst Brett Hoselton said in a note to investors that his sources, whom he did not identify or describe, tell him that Canadian auto supplier Magna International Inc. and a private equity partner have written a joint letter offering to buy Chrysler for $4.6 billion to $4.7 billion.
The talk comes as investors, markets, employees and suppliers have been itching to find out who will buy Chrysler. There have been constant rumors that one suitor or the other will soon make a multibillion-dollar bid.
A company official said, however, that no news on a potential sale is imminent and no action is expected at the company's annual shareholders' meeting on April 4.
The official, who didn't want to be identified because of the sensitive nature of the discussions, said although shareholders will bring up the sale at the meeting in Berlin, "no material news" was expected.
Hoselton's note did not identify Magna's private equity partner, but said the company appears to have been in contact with Cerberus Capital Management LLC and Blackstone Group, two firms that have reviewed Chrysler's finances.
Hoselton described the bid for Chrysler as a low one and said the company knows that it is unlikely to prevail.
"The company also sees it as an opportunity to purchase an inexpensive stake in the automaker should other bidders retreat," his note said.
He said Magna would take a 20 to 25 percent stake in Chrysler.
Chrysler spokesman Mike Aberlich would not comment on Hoselton's note or on any potential bids.
Magna's top executive has confirmed his company's interest, but a company spokeswoman yesterday would not comment on the possible bid for one of its largest customers.
"We continue to review potential alternatives regarding the future of the Chrysler Group. Discussions about this matter are strictly confidential and will not be disclosed publicly, nor will the company comment on speculation related to those discussions," spokeswoman Tracy Fuerst said.
DaimlerChrysler stock rose $4.76, or 6.1 percent, to close at $82.36 on the New York Stock Exchange. It has traded in a 52-week range of $45.98 to $77.99.
Cerberus and a consortium of investors headed by Blackstone and Centerbridge Partners LP have studied Chrysler's books. Private equity firms Apollo Management LP and the Carlyle Group, along with General Motors Corp. also are said to be interested.
Spokesmen for the private equity firms haven't talked about the issue and GM won't confirm or deny the reports.
Although Daimler-Benz AG paid $36 billion for Chrysler in 1998, industry analysts have placed its value at anywhere from nothing to $13.7 billion. Estimates vary with the value placed on assets such as brand names, factories and materials, all weighed against Chrysler's estimated $19 billion long-term liability to pay health care benefits for unionized retirees.