Kerkorian makes $4.5bn offer for Chrysler
april 06,2007
Kirk Kerkorian, the billionaire investor, has made a $4.5 billion (£2.3 billion) bid for Chrysler in a dramatic return to the company he tried to take over more than a decade ago.
Jerry York, an associate of Mr Kerkorian’s and a former chief financial officer of Chrysler, is expected to play a key role in the move.
News of the bid by Tracinda, Mr Kerkorian’s investment vehicle, came just a day after DaimlerChrysler said that it was in talks with several parties. They are believed to be Magna, a Canadian car parts group working with a private equity group; and two other private equity bids — from a consortium led by Blackstone and one from Cerebus.
Tracinda said that it wanted to “build and strengthen” Chrysler as an independent business and that it would offer both DaimlerChrysler and its trade unions the chance to be equity partners in a deal.
It said: “Tracinda believes by taking a long-term approach to solving Chrysler’s problems, it can become a robust and lasting, stand-alone entity.”
Tracinda’s all-cash offer is subject to reaching a “new satisfactory collective bargaining agreement” with the United Auto Workers Union and also agreeing with DaimlerChrysler to share the unfunded pension liabilities and healthcare costs of retired workers. It expects to be in due diligence for about two months.
Dave Cole, head of Detroit’s Centre for Automotive Research, America’s top motor industry analyst, believes that Mr Kerkorian may team up with one or more private equity firms to complete a deal.
“These are very cheap assets but there are some huge liabilities in the form of labour costs — healthcare and pensions,” Mr Cole said. “I would not be surprised to see Kerkorian get together with a private equity firm or a consortium to take care of this.”
DaimlerChrysler would not comment beyond repeating that it was in talks with possible partners but that all options for Chrysler were still open.

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