GM still in mix for Chrysler - report

Private equity groups have the edge in bidding for DaimlerChrysler unit, but GM still having talks.


NEW YORK (CNNMoney.com) -- General Motors is a long shot to buy Chrysler Group from DaimlerChrysler but is still in the running for its troubled rival, according to a published report.

The Detroit News reports that people familiar with the situation say GM (Charts) has so far refused to offer DaimlerChrysler (Charts) any money for its North American unit. Instead it has offered to give DaimlerChrysler a stake of GM stock equal to less than 10 percent of its shares.

GM is also looking for DaimlerChrysler to pay it $1 billion in cash in return for it taking Chrysler and its estimated $17 billion in health care obligations to retirees.

The paper says that the GM offer was made to DaimlerChrysler in January and rejected as too low. But the offer, and the $1.5 billion loss that Chrysler Group posted for 2006, convinced DaimlerChrysler executives to announce on Feb. 14 that they would consider all options, including a possible sale, for Chrysler.

Canadian auto supplier Magna International (Charts) made its own offer for Chrysler Group last week, according to the paper's report. Bret Hoselton of KeyBanc Capital Markets, said in a research report Friday that Magna and an unnamed private equity partner had offered to acquire Chrysler for $4.7 billion.

Other private equity firms, including Cerberus Capital Management and a joint effort by the Blackstone Group and Centerbridge Partners, are reportedly working on bids for Chrysler.

While the private equity groups are seen to be in the lead in the bidding for Chrysler, the paper reports that GM and DaimlerChrysler have continued to talk about a possible Chrysler deal, according to people with knowledge of the talks.

GM Chief Financial Officer Fritz Henderson has met several times with DaimlerChrysler CFO Bodo Uebber and chief strategist Ruediger Grube, according to the report, and GM CEO Rick Wagoner and DaimlerChrysler CEO Dieter Zetsche have also met periodically.

Officials from the companies would not comment on discussions to the paper.

The paper says that while DaimlerChrysler executives are eager to announce a decision on Chrysler soon, it is not clear if they will be able to do so by the company's April 4 shareholder meeting.

While Chrysler Group fell from profitability to deep losses in 2006, DaimlerChrysler was still able to post a companywide profit. In addition to saying it would consider a possible sale of Chrysler, the company also announced a turnaround plan that includes plant closings and the elimination of 13,000 jobs.

Meanwhile GM is farther along in its own turnaround plans. It was able to reverse its 2005 loss last year as its North American auto operations nearly broke even in the fourth quarter, after a loss of $1.4 billion in the year-earlier quarter.

In 2006, General Motors executives held several months of talks about the possibility of joining an alliance of Nissan (Charts) and Renault, but those talks failed when GM demanded that those two automakers pay it to join the alliance.

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.