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Published: Tuesday, 2/20/2007

Industry ponders future of Chrysler as stock rises

FROM THE BLADE S WIRE SERVICES

FRANKFURT, Germany With DaimlerChrysler AG putting all options for its struggling U.S. unit on the table, the auto industry is pondering the fate of Chrysler.

Quoting unnamed people familiar with the negotiations, the Detroit News reported yesterday that The chief executives of General Motors Corp. and DaimlerChrysler met in December to kick off talks about a sale of Chrysler Group.

Speculation about a potential buyout has pushed DaimlerChrysler shares 12 percent higher since Daimler s announcement last week.

In German trading yesterday, they rose to their highest since July, 2001, after gaining almost 4 percent on the day. U.S. markets were closed yesterday for Presidents Day.

Chrysler, which reported a $1.48 billion operating loss for 2006, plans to cut 13,000 jobs in North America, reduce production, and shutter a plant in Delaware that makes its slow-selling Dodge Durango sport utility vehicle in a bid to return to profitability by 2008.

Speculation on deals ranged from a tie-up with Nissan Motor Co. and Renault AG to talk of a link with Hyundai Motor Co. to a homegrown deal with GM.

Hyundai said yesterday, We are not considering to buy Chrysler because our hands are full.

Others have declined to comment, including France s PSA Peugeot-Citroen and Renault and Italy s Fiat SpA.

DaimlerChrysler has kept mum since announcing last week that it had not ruled out any options for Chrysler which, until a year ago, had kept the world s fifth-largest automaker profitable amid quality issues at the Mercedes Car Group.

Yesterday, Silke Walters, a spokesman in Stuttgart, told the Associated Press, All we have to say at this point in time was what was said last week.

Estimates of how much the company might ask for Chrysler range from $5 billion to $13.7 billion, depending on factors that include pension liabilities, health care obligations, and fair value for plants and material. Daimler-Benz AG paid $36 billion for the company in 1998.



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