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Sat, Apr 07, 2007 - Page 10 News List

Billionaire makes second bid for Chrysler

LONG COURTSHIP After allegedly being tricked out of billions of dollars in 1998, Kirk Kerkorian is launching a US$4.5 billion cash offer to acquire the struggling carmaker


Billionaire investor Kirk Kerkorian is making another bid for Chrysler, adding a new contender to the list of those vying to own the troubled automaker.

Kerkorian's Tracinda Corp, which tried to buy Chrysler in 1995 and lost out when the company merged with Daimler-Benz three years later, made a US$4.5 billion cash offer on Thursday for DaimlerChrysler AG's Chrysler Group.

Kerkorian's bid was slightly lower than at least one competing offer from Canadian auto-parts supplier Magna International Inc, worth a reported US$4.7 billion.

Two private equity groups have also expressed interest.

A deal would put Kerkorian in charge of Chrysler a decade after he said he was tricked out of billions of dollars in the 1998 deal in which Germany's Daimler-Benz joined with Chrysler in the so-called "merger of equals."

Long an active investor in automakers, the 89-year-old former movie mogul offered US$22.8 billion for Chrysler in an unsuccessful 1995 takeover bid.

Chrysler has struggled amid intense competition in the industry.

The maker of the Dodge Ram and the Jeep Grand Cherokee lost US$1.5 billion last year and has announced 13,000 job cuts in North America and reduced production.

Tracinda in a statement said it wants "to build and strengthen" the company and "will offer the UAW and Chrysler management the opportunity to participate as equity partners in the transaction."

The investment company said it would put down a US$100 million deposit for the right to exclusive bargaining rights and signaled that it's ready to start a more extensive review of Chrysler's financial books right away. Tracinda said a deal could be completed within 60 days.

DaimlerChrysler shares climbed US$4.24, or 5.3 percent, to close at US$84.80 on the New York Stock Exchange after rising to a new 52-week high of US$84.90 earlier in the session.

Han Tjan, head of corporate communications at DaimlerChrysler in New York, said the German-US automaker was talking with partners about a sale and that the chairman is satisfied with the process.

"All of our options are still open. For us to talk about [Tracinda] is speculation," Tjan said.

At least two groups besides Tracinda and Magna reportedly have expressed interest in the Auburn Hills, Michigan-based Chrysler Group. Cerberus Capital Management LP and a consortium of investors led by Blackstone Group each have reviewed Chrysler's finances and are expected to make bids.

Cerberus spokeswoman J.J. Rissi said the could "offer no confirmation on any bid submission by Cerberus." John Ford, a spokesman for Blackstone, said he could not comment on Tracinda's bid.

California-based Tracinda said its offer was subject to Chrysler reaching a new collective bargaining agreement with the United Auto Workers (UAW) union as well as a deal with DaimlerChrysler on sharing the estimated US$22 billion unfunded pension liabilities and health care costs of Chrysler retirees.

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