Last week we told you that DaimlerChrysler’s RÃ¼diger Grube was heading to New York to visit with potential suitors for the Chrysler Group. And it appears he was a man on a mission. It seems that a close source has told news outlets that a sale could be wrapped up by as early as May.
Although talks are ongoing and nothing is definite, it looks like at least one of the bidders has met the company’s expectations in principle. Those bidders included Blackstone Group, Centerbridge Capital Partners LP and Cerberus Capital Management LP, as well as Canadian auto-parts supplier Magna International Inc. and private-equity firm Ripplewood Holdings Inc. After initial meetings, the final three appeared to be Cerberus, Blackstone and Magna.
Deals like this don’t happen overnight, however, so even if a bidder has been chosen, it will take some time to dot the i’s and cross the t’s. And one slightly sticky point may remain. Workers’ reps on the Chrysler supervisory board have reportedly been okay with a sale “as long as the buyer agrees to protect as many jobs as possible.” That’s a bit different than what UAW head, Ron Gettelfinger, said a couple of days ago. His words were a bit less supportive. Something closer to sale or no sale, UAW jobs were the most important thing. He also suggested he had the support of the supervisory board, of which he is a member. Equity partnership possibilities are also a potential stumbling block still. Since Kirk Kerkorian first brought that issue into the spotlight, other bidders have incorporated it into their proposals.
But billionaire Kerkorian’s $4.5 billion bid is apparently still getting snubbed as well. Gettelfinger, who said he has met the bidders, said the UAW would reject any bid from so-called “strip-and-flip” investors. That seemed a thinly veiled slap at interested leveraged-buyout firms. The primary concern for the union is preserving jobs, which also explains why GM didn’t ever have a real chance, according to sources. Of course, with a $1.5 billion loss last year, Chrysler still plans to cut 13,000 jobs in hopes of returning to profitability by 2008.
[Source: Automotive News, sub req]