Late word from Germany is that DaimlerChrysler (DCX) will not let just anyone buy its Chrysler auto unit. The Wall Street Journal speculates that Daimler management will want to share technology with its US unit in the event that a sale goes through. He needs the new buyer’s cooperation.
That probably isn’t the real reason. Daimler chief Dieter Zetsche has a bunch of labor members on his supervisory board. They think, and are almost certainly correct, that if a private equity operation like Cerberus Capital Management or Blackstone Group gets its hands on the company, they will break it into pieces. They might even close units that don’t make money.
Canadian car parts company, Magna International, is also considered a likely bidder. But, since it gets business from Ford (F) and GM (GM), it is very difficult to see how it could own Chrysler without conflicts of interest.
The dark horse among potential bidders still has to be GM. If it can cut a proper deal with the UAW to take some workers out of a merged company, the economies of scale would work in its favor. It would be, once again, the largest car company in the world, by far. GM could certainly share technology with Daimler, which would become a producer of high-end cars and trucks.
GM management says that it is more important to them to be profitable than to be bigger than Toyota (TM). But, the GM board has to know at some level that if the company keeps getting smaller, it will be neither.
Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.
Top Gaining Stocks
Top Losing Stocks