Billionaire Kerkorian's Tracinda Makes Cash Offer For Chrysler - NewsOn6.com - Tulsa, OK - News, Weather, Video and Sports - KOTV.com |

Billionaire Kerkorian's Tracinda Makes Cash Offer For Chrysler

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NEW YORK (AP) _ Billionaire investor Kirk Kerkorian is making another bid for Chrysler, adding a new contender to the list of those vying to own the troubled automaker.

Kerkorian's Tracinda Corp., which tried to buy Chrysler in 1995 and lost out when the company merged with Daimler-Benz three years later, made a $4.5 billion cash offer Thursday for DaimlerChrysler AG's Chrysler Group.

Kerkorian's bid is slightly lower than at least one competing offer from Canadian auto-parts supplier Magna International Inc., worth a reported $4.7 billion. Two private equity groups have also expressed interest.

A deal would put Kerkorian in charge of Chrysler a decade after he said he was tricked out of billions of dollars in the 1998 deal in which Germany's Daimler-Benz joined with Chrysler in the so-called ``merger of equals.''

Long an active investor in automakers, the 89-year-old former movie mogul offered $22.8 billion for Chrysler in an unsuccessful 1995 takeover bid.

Chrysler has struggled amid intense competition in the auto industry. The maker of the Dodge Ram and the Jeep Grand Cherokee lost $1.5 billion last year and has announced 13,000 job cuts in North America and reduced production.

Tracinda in a statement said it wants ``to build and strengthen'' the company and ``will offer the UAW and Chrysler management the opportunity to participate as equity partners in the transaction.''

The investment company said it would put down a $100 million deposit for the right to exclusive bargaining rights and signaled that it's ready to start a more extensive review of Chrysler's financial books right away. Tracinda said a deal could be completed within 60 days.

DaimlerChrysler shares climbed $4.24, or 5.3 percent, to close at $84.80 on the New York Stock Exchange after rising to a new 52-week high of $84.90 earlier in the session.

Han Tjan, head of corporate communications for DaimlerChrysler in New York, said the German-American automaker is talking with partners about a sale and that the chairman is satisfied with the process.

``All of our options are still open. For us to talk about (Tracinda) is speculation,'' Tjan said.

At least two groups besides Tracinda and Magna reportedly have expressed interest in the Auburn Hills, Mich.-based Chrysler Group. Cerberus Capital Management LP and a consortium of investors led by Blackstone Group each have reviewed Chrysler's finances and are expected to make bids.

Cerberus spokeswoman J.J. Rissi said the could ``offer no confirmation on any bid submission by Cerberus.'' John Ford, a spokesman for Blackstone, said he could not comment on Tracinda's bid.

A message seeking comment was also left with officials from Magna.

California-based Tracinda said its offer is subject to Chrysler reaching a new collective bargaining agreement with the United Auto Workers union as well as a deal with DaimlerChrysler on sharing the estimated $22 billion unfunded pension liabilities and health care costs of Chrysler retirees.

UAW officials did not immediately comment.

Russell Phillips, union steward for UAW Local 1700, said word of a possible sale began filtering through the Sterling Heights, Mich., assembly plant Thursday afternoon.

``It would be very interesting if we can get something like that so we can help our members,'' said Phillips, a 20-year Chrysler employee. ``A lot will depend on how open they are going to be with the UAW and if they really are willing to sit down and talk with us.''

Analysts said the deal would be difficult for Kerkorian to pull off because of his turbulent history with Chrysler and the size of the company's large legacy costs.

``I'm not sure what Kirk brings to the party except he can't help himself when it comes to playing with Chrysler,'' said David Healy, an analyst with Burnham Securities.

But David Cole, chairman of the Center for Automotive Research in Ann Arbor, Mich., said any deal would require an arrangement with labor on the legacy costs and noted that Tracinda adviser Jerome York has a long history of working with the UAW.

In a letter to DaimlerChrysler Chairman Dieter Zetsche, Tracinda said it has been following the developments at Chrysler closely and has been studying available materials about the automaker.

``Having been a major shareholder for over a decade we are very familiar with both Chrysler and the automotive industry, and have come to believe, all factors considered, that a private ownership approach is in the best interests of all Chrysler constituencies,'' said the letter, signed by York, a former Chrysler Corp. executive.

The letter said it would be easier for a privately owned company to take a long-term approach ``to build Chrysler into a robust and lasting, stand-alone entity.''

Kerkorian long has had interest in automotive companies.

Late last year, he dumped the last block of what once was a nearly 10 percent share of General Motors Corp., the world's largest automaker.

He had pushed for an alliance between GM, Nissan Motor Co. and Renault SA. GM's board voted to explore the possibility, but after three months of discussion, the idea was scrapped. York served as Tracinda's representative on the GM board but stepped down after the alliance talks fell apart.

Kerkorian, whose Tracinda was Chrysler's largest shareholder at the time of its 1998 merger with Daimler-Benz, sued the combined company in 2000. He claimed that Daimler-Benz engineered a takeover of Chrysler, then cheated him out of billions by casting the deal as a merger of equals. A federal judge rejected his claim.

Tracinda, which is named after Kerkorian's daughters, Tracy and Linda, has the majority stake in the casino and hotel operator MGM Mirage Inc.
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