Kerkorian Springs Surprise $4.5bn Cash Bid for Chrysler ; BUSINESS

Apr 06, 01:59 AM

Current Headlines: By Stephen Foley

Kirk Kerkorian, the octogenarian billionaire who last year tried to persuade General Motors into an alliance with Renault and Nissan, has made a $4.5bn cash bid for Daimler-Chrysler, the loss-making US carmaker put up for sale by its German parent.

In a pitch aimed squarely at the unions on Daimler-Chrysler's supervisory board, Mr Kerkorian said his investment vehicle, Tracinda, would be a long-term holder of the business, which would give workers a substantial equity stake.

In a letter to Daimler-Chrysler's chief executive, Dieter Zetsche, Mr Kerkorian's right-hand man, Jerry York, implicitly warned of the dangers of selling to either Blackstone or Cerberus, private equity groups believed to have pitched similar-sized bids, or to Magna International, a Canadian-listed parts supplier which is also said to be interested.

"The right [meaning, exceptionally patient] private ownership can do things that are difficult for both public companies and the wrong [meaning, not so patient] private ownership," said Mr York, "specifically, take a very long-term approach to solving Chrysler's problems without worrying about earnings per share results for the initial five, six or seven-year period it will likely take to build Chrysler into a robust and lasting standalone entity."

Mr Kerkorian made a failed attempt to buy Chrysler 12 years ago. The new tilt at Chrysler suggests Mr Kerkorian - who turns 90 in June - is still optimistic that the US car industry can be returned to profitability. But, as yesterday's letters to DaimlerChrysler show, many obstacles remain.

A deal is contingent on unions agreeing substantial concessions on health-care benefits, in return for an equity stake in the company. And Tracinda wants the German parent company to take over some of the estimated $12bn in pension and healthcare liabilities at Chrysler.

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