The Financial Times says that Cerberus Capital Management, Carlyle, Apollo Management and Ripplewood are looking at Chrysler (DCX). And, recently departed VW chief Wolfgang Bernhard may be advising one of them on the transaction. He might be a CEO-in-waiting as Jerome York was for the Kerkorian interests when they were buying into GM (GM).
It is likely that the private equity crowd will have no more success with Chrysler than York & Co. had with GM. The reason is simple. A rich, non-automotive buyer has little ability to consolidate plants, product design, and suppliers. A buyer like GM might and the savings could be significant. A rich private equity buyer would be a darling for the UAW. Crying poverty is tough when the owner(S) have access to billions of dollars.
Private equity was able to buy into Delphia, the big car parts company spun off from GM. But, it had been put into bankruptcy which gave it a special leverage with the unions. Daimler does not have this opportunity. It would be hard pressed to argue that one of its units was insolvent.
There will be no private equity buyer for Chrysler. That leaves GM and auto companies in Asia, perhaps even China. And, that means that Daimler may not find a deal.
Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.
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