Three potential buyers for the Chrysler Group were said to be finalizing bids Thursday in hopes of getting the inside track on an acquisition of the American division of DaimlerChrysler AG. No formal bids had been received but individuals familiar to the process said offers are expected from private-equity giants Blackstone Group and the Cerberus Capital Management as well as the Canadian auto supplier Magna International Inc.
Sources said that Blackstone, which has earlier joined with Centerbridge Partners, was preparing to present its bid. All of the bids likely will be received by J.P. Morgan Chase, DaimlerChrysler AG's investment banker. The bids are expected to be ready before Daimler convenes its annual shareholders meeting Wednesday in Berlin.
After giving bids, a critical phase in which a leading Chrysler suitor could be chosen by DaimlerChrysler for an exclusive negotiating period. "Anything can happen," said Stephen Kaplan, a finance professor at the University of Chicago Graduate School of Business. "They could pick an exclusive bidder, or send everybody back because the bids are too low." That is when an is needed to blow frosty breeze to the situation.
The bidders are taking different techniques to grab the historic opportunity of purchasing one of Detroit's Big Three auto manufacturers. By far, Blackstone portrayed itself as the most successful firm in the private-equity realm. The company has deep-pockets investor that is assured in the turnaround skills of the present Chrysler management team.
Another mighty contender is Cerberus, which uses a more aggressive technique to acquire the ailing automaker. The technique includes lining up a roster of outside advisers such as former Chrysler Chief Operating Officer Wolfgang Bernhard to invigorate the struggling automaker.
Magna, a first-rate supplier to Chrysler, also holds an ace. Magna Chairman Frank Stronach has never concealed his ambitions to be a major player in the global auto industry. Another suitor waiting in the wings is General Motors Corp. The latter has made its bid for Chrysler in January and is poised to do a deal if the other offers fail to meet Daimler's expectations.
Analysts said that DaimlerChrysler will need weeks, if not months, to sort through the complex challenge of selling Chrysler. "The due diligence for this sort of deal takes more than a few weeks," said Juergen Pieper, the chief auto analyst at Metzler Bank in Frankfurt.
Teams from Blackstone, Cerberus and Magna have met with Chrysler executives in Auburn Hills, and outlined their plans for the U.S. automaker to DaimlerChrysler Chief Executive Dieter Zetsche. They have pledged to follow through with the ailing automaker's restructuring. The said plan requires the elimination of 13,000 jobs and cutting production capacity by 2009.
