General Motors has a bid in for the Chrysler Group and remains a long-shot candidate to acquire the struggling US division of DaimlerChrysler, The Detroit News said.
Go deeper with GlobalData
While GM’s offer, made in late January, was initially rejected by DaimlerChrysler, the bid is still active as other potential buyers gear up to make their own proposals this week, the paper reported.
GM’s bid has three components but does not include any cash payment for Chrysler, people familiar with the situation told the Detroit News. To acquire Chrysler, GM offered to give DaimlerChrysler a minority stake in GM stock of less than 10%.
In addition, the proposal called for DaimlerChrysler to pay GM more than $US1bn to defray Chrysler’s health care costs, and then team up with GM to seek financial concessions for Chrysler from the United Auto Workers, the paper said.
The GM proposal was rejected as too low by DaimlerChrysler, the Detroit News said, citing people close to the talks.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataThe rejection then prompted DaimlerChrysler CEO Dieter Zetsche to go public on 14 February that “all options” were being explored for Chrysler, the paper said.
The Detroit News noted that Zetsche’s announcement triggered a rush of interest in Chrysler from Wall Street investors as well as the Canadian supplier Magna International which, last week, made a provisional offer to acquire Chrysler, the paper added, citing a source close to Magna’s board of directors.
The report noted that auto analyst, Bret Hoselton of KeyBanc Capital Markets, said in a research report on Friday that Magna and an unnamed private equity partner had offered to acquire Chrysler for $4.7bn.
However, the source close to Magna told the Detroit News on Sunday that the supplier is still talking to several private equity firms about potential partnerships.
People close to the sale process told the paper two major private-equity contenders are likely to weigh in with bids this week – Cerberus Capital Management and a joint effort by the Blackstone Group and Centerbridge Partners.
The report said both groups have been aggressive investors in the automotive sector and are said to be keenly interested in a Chrysler acquisition.
Cerberus has hired former Chrysler chief operating officer Wolfgang Bernhard as an adviser, a move that could strengthen its position in the bidding process, the Detroit News said.
