Chrysler Suicide Watch 11: Captain Kirk Beams Down
At last week's DaimlerChrysler stockholder meeting, a man named Ekkehard Wenger stepped up to the microphone and said his piece. "For nine years you have been sitting on this scrapheap called Chrysler. Nobody has learned anything. To call this a sale is a euphemism. If you pay for the garbage man to empty the dustbin, does that mean you have sold something to the garbage man?" While calling Chrysler a "scrapheap" is a bit harsh– the American automaker supported Mercedes for several years when the Germans were losing money– one wonders how Kirk Kerkorian feels about being called a garbage man.
Captain Kirk surprised quite a few people last week. The incipient nonagenarian beamed down the only private bid for Chrysler thus far: $4.5b, with $100m in cash up front in return for exclusive bidding rights. Kirk's play marks his second attempt to take over Chrysler; a sequel to his ‘95 "I'm with Lee" (Iacocca) tour. While that financial foray failed, Kirk became Chrysler's largest stockholder. He secured a place at the board room table for his beancounter extraordinaire Jerry York.
In 1998, Daimler-Benz acquired Chrysler. Despite a financial bonanza, Kerkorian expressed his displeasure with the so-called "merger of equals" as billionaires are wont to do: he sued DaimlerChrysler for $2b. Kerkorian claimed Daimler-Benz had deceived investors, misrepresenting a corporate takeover as a partnership. He lost the lawsuit, appealed and lost again.
Kerkorian expressed his displeasure as billionaires are wont to do: he tried to take over General Motors. After buying huge quantities of GM stock, Kirk secured a place at the board room table for his beancounter extraordinaire Jerry York. When GM rebuffed Kerkorian/York's plans for reform and rejected a suggestion to merge with Renault-Nissan, the Lion of Las Vegas cashed in his chips, sent Jerry home and called it a day.
Spying Chrysler's upcoming dissolution, Kerkorian is hoping the third time's a charm. In carefully worded letters from his pet Yorkie to CEO Dieter Zetsche and the DCX Supervisory board, Kerkorian outlined his USP (Unique Selling Point). If they'll deliver Chrysler unto Kirk he'll offer the UAW and Chrysler's senior management "the opportunity to participate… as equity partners in the transaction."
In a statement released last Friday, Tracinda Corporation (Kerkorian's corporate front) described a Kerkorian-controlled Chrysler where "all the parties share equitably — with no one group (including ourselves) trying to gain an unfair advantage over the others."
For their part, the Germans are understandably leery of Kirk's intentions. Lest we forget, just three short years ago, Mr. Kerkorian was dragging DCX to court to answer fraud charges, which cost DCX tens of millions of US dollars in legal fees.
Given Kerkorian's "strip and flip" history with other acquisitions, the United Auto Workers (UAW) is suspicious that Kirk's ode to consensus masks the man's intention to slice the company to ribbons. UAW Local 7 president Dale Hunt asked, "What changed his mind from breaking it up to wanting to keep it together, and now all of a sudden he wants to get involved with the union?"
Maybe it's got something to do with DCX' assertion that they won't sell to someone just because their bid was worth a few extra dollars. (As if.) The Germans have dictated that two other considerations must be addressed by bidders: preserving workers' benefits and ensuring Chrysler's long-term health.
That's gonna be a bitch. Chrysler's new master will inherit almost $17b in healthcare liabilities. Kerkorian and Co. are trying to resolve the issue by asking the UAW for healthcare concessions in return for [a purported] 10 percent equity stake in the company, plus a seat on the board.
Or not. UAW President Ron Gettelfinger vehemently denies participating in any discussions with Kirk's mob. Last Friday, in an interview with Detroit radio host Paul W. Smith, Big Ron stated, "I've had no discussions with anybody from Tracinda, and I don't recall anyone in our organization talking to them. We've had no discussions in this regard."
If Kerkorian wants to pull off this deal, he'll have to mend fences with Big Ron's constituency- and fast. Every Chrysler bid is likely to include provisions for UAW concessions. If Captain Kirk wants his money to rule the day, he needs more than a promise to give the UAW an equity stake. As always, a procession of armored cars stuffed with cold hard cash should do the trick.
Additionally, Jerry York had better start putting in a lot of overtime kissing ass on the DCX board. With a ten year history of animosity to overcome, Tracinda's main men may be about to learn the meaning of an old military expression: "Don't shit in your own mess kit."
Neither DCX nor the UAW have shown any interest in Kerkorian's offer. With competition including one of Chrysler's biggest suppliers (Magna) and a former Chrysler COO (Cerberus' latest hire, Wolfgang Bernhard) this looks like strike three.
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- Del My father bought GM cars in the 60's, but in 1971 he gave me a used Datsun (as they were called back then), and I'm now in my 70's and am happy to say that GM has been absent from my entire adult life. This article makes me gladder than ever.
- TheEndlessEnigma That's right GM, just keep adding to that list of reasons why I will never buy your products. This, I think, becomes reason number 69, right after OnStar-Cannot-Be-Disabled-And-It-Comes-Standard-Whether-Or-Not-You-Want-It and Screw-You-American-Car-Buyer-We-Only-Make-Trucks-And-SUVs.
- 3SpeedAutomatic Does this not sound and feel like the dawn of ICE automobiles in the early 20th century, but at double or triple speed speed!!There were a bunch of independent car markers by the late 1910’s. By the mid 20’s, we were dropping down to 10 or 15 producers as Henry was slashing the price of the Model T. The Great Depression hit, and we are down to the big three and several independents. For EVs, Tesla bolted out of the gate, the small three are in a mad dash to keep up. Europe was caught flat footed due to the VW scandal. Lucid, Lordstown, & Rivian are scrambling to up production to generate cash. Now the EV leader has taken a page from the Model T and is slashing prices putting the rest of the EV market in a tail spin. Deja vu……
- Michael Eck With those mods, I wonder if it's tuned...
- Mike-NB2 I'm not a Jeep guy, but I really, really like the 1978 Jeep Cherokee 4xe concept.
@my12by60: I would have agreed until a couple of weeks ago. But now, most analysts agree that Zetsche pretty much has to sell Chrysler. If DCX announces anything short of a sale, the stock price would fall rapidly and open the door for raiders. An internal analysis by JP Morgan revealed, that it would be better to basically give Chrysler away than keeping it. According to the same report, the best way would be to bring Chrysler to the stock market and thereby deprive the UAW of the security that Daimler offers. But this scenario is also quite unlikely, since it would take too much time, while the stockholders want quick actions. Just look at what happened today: Rumors appeared that there won’t be an exclusive negotiating party by the end of this month, since Magna needs a couple more days and Kirk might present a better offer. This rumor about a possible, very short delay already lead to a 2.3% loss for DCX stocks.
Sell Chrysler to UAW for the $800M they have in their strike fund..HaHahAhAhh...I kill me. It would be such great entertainment to watch Gettelfinger et al try to actually run a profitable business...Slap-stick at its finest.