DaimlerChrysler Confirms Talks on Chrysler Sale

DaimlerChrysler AG chief Dieter Zetsche confirmed Wednesday that the transatlantic car giant had launched talks with potential buyers for its troubled U.S. offshoot Chrysler but insisted that all options remained open on the fate of the Detroit-based group. Talks had taken place with possible partners who had signaled a clear interest in the loss-making Chrysler, Zetsche said at the annual shareholders' meeting in Berlin, which was dominated by talk about Chrysler's future.

From Deutsche Presse-Agentur

BERLIN — DaimlerChrysler AG chief Dieter Zetsche confirmed Wednesday that the transatlantic car giant had launched talks with potential buyers for its troubled U.S. offshoot Chrysler but insisted that all options remained open on the fate of the Detroit-based group.

Talks had taken place with possible partners who had signaled a clear interest in the loss-making Chrysler, Zetsche said at the annual shareholders’ meeting in Berlin, which was dominated by talk about Chrysler’s future.

"We are talking with some of the potential partners who have shown a clear interest," 53-year-old Zetsche told the shareholders gathered for the AGM.

The prospect of DaimlerChrysler jettisoning its U.S. operations comes nine years after what is now the world’s fifth biggest carmaker was formed through a $36 billion merger of Daimler and Chrysler.

Since then, however, the DaimlerChrysler share price has slumped and the group’s market value has almost halved, sparking stockholder anger that the group’s ambitious global expansion has not lived up to promises.

"For us shareholders, the last years still lie very heavy in the stomach," said Henning Gebhardt, a representative of funds manager DWS, summing up the mood of those attending the AGM. He called for an end of the merger with Chrysler.

"We want the best possible solution for Chrysler and the DaimlerChrysler group," Zetsche said. But he stopped short of setting out any details of the plans to sell off Chrysler.

"It is also true that we need to keep all options open," he said. "We need to have the maximum scope for maneuver," he added.

Among those lining up to take Chrysler off DaimlerChrysler’s hands are three private equity firms – Cerberus Capital Management LLC, Centerbridge Capital Partners LLC and Blackstone Group LP as well as Canadian auto parts maker Magna International Inc. Chrysler is one of Magna’s largest customers.

Selling off Chrysler is expected to generate up to $9 billion, according to German media reports.

The doubts about Chrysler’s future come three years after DaimlerChrysler dramatically pulled out of an alliance with Japan’s debt-ridden Mitsubishi Motors Corp.

The tie-up with Mitsubishi and the merger with Chrysler formed key pillars of former chief Juergen Schrempp’s push to transform the Stuttgart-based company into a Welt AG — or World Inc. with operations spanning Europe, the U.S. and Asia.

Wednesday’s AGM was also held against the backdrop of a growing debate about the threat posed by global warming, with Zetsche insisting that the company was facing up to the challenges of the environmental threat.

"For us at DaimlerChrysler, the emission-free automobile is and remains the long-term goal," Zetsche told shareholders.

Wednesday’s meeting is also expected to elect Deutsche Bank AG chairman Clemens Boersig, to the company’s supervisory board. DaimlerChrysler board member Manfred Bischoff is also expected to be elected to the post of chairman.

Bischoff, who is also co-chairman of the European Aeronautic, Defence & Space Co., will replace 72-year-old Hilmar Kopper, a former Deutsche Bank chief executive and chairman, who has held the post of Chrysler chairman for 17 years.

Despite moving to cut back its stakes in industrial companies, Deutsche Bank, which is Germany’s biggest bank, still holds a 4.4 percent stake in DaimlerChrysler. Kuwait is now DaimlerChrysler’s biggest shareholder with a stake of 7.1 percent.

While DaimlerChrysler shareholders were meeting in Berlin, the company’s shares edged down by 0.37 percent to about $82.60 dollars in trading in Frankfurt.

This followed a more than 30 percent surge in the company’s shares since the beginning of the year amid growing speculation that the group planned to sell off Chrysler, which last year posted a staggering $2.6 billion loss.

The loss came in the wake of a shift in the U.S. car market towards smaller more energy efficient cars following last year’s jump in gas prices.

Chrysler is planning to roll out 20 new models 13 refreshed models over the next two years.

"We have the right products in the pipeline," Zetsche assured stockholders.

But the loss forced DaimlerChrysler to unveil in February yet another plan to revamp Chrysler, including slashing 13,000 jobs.

Nevertheless, DaimlerChrysler said again on Wednesday it expects a significant rise in group profitability in 2007 through 2009.

As DaimlerChrysler’s problems have mounted in recent years, some analysts began talking about the risks that the world’s fifth biggest carmaker could fall victim to unwelcome takeover moves.

But now analysts believe the pickup in the share price combined with the strong performance of DaimlerChrysler’s truck division and the turnaround in the fortunes of the group’s flagship luxury Mercedes-Benz offshoot have helped the company reduce its vulnerability to a takeover.