Finding a Buyer for Chrysler
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This is the VOA Special English ECONOMICS REPORT.
Who will succeed in buying Chrysler, the troubled carmaker in the United States? The competition is just getting started.
Dieter Zetsche, chairman of DaimlerChrysler, confirmed last week that his company was in talks with possible buyers for its Chrysler Group. Chrysler has been part of the German company for less than ten years.
Investor Kirk Kerkorian has offered four and one-half billion dollars for Chrysler through his investment company, Tracinda. He says he would seek a "true partnership" with Chrysler workers and labor union members.
He tried to buy Chrysler in nineteen ninety-five. Now Mr. Kerkorian has even offered one hundred million dollars for the right to negotiate the sale with DaimlerChrysler.
But published reports suggest that DaimlerChrysler officials have not shown much interest in his offer. Three other groups have also made offers.
Chrysler was one of America's Big Three independent automobile makers, along with General Motors and Ford. But Chrysler joined with Daimler-Benz in nineteen ninety-eight.
Since the merger, Chrysler has struggled. The company has lost market share in the United States to Japanese carmakers like Toyota. Last year, the Chrysler Group lost one and one-half billion dollars. The company is cutting jobs in North America.
Besides Kirk Kerkorian, two private equity groups have offered to buy Chrysler. Cerberus Capital Management has made an offer. So has a partnership of the Blackstone Group and Centerbridge Partners. The value of these offers has not been made public.
Private equity groups are specialists in what is known as taking a publicly traded company private. They buy all the stock in the company. Then they make changes to the business in an effort to add value. Finally they sell the company back to public shareholders for a profit.
Magna International, a Canadian maker of car parts, has also made an offer to buy Chrysler. Magna reportedly has offered more than four and a half billion dollars.
Labor unions are likely to play an important part in negotiations to sell Chrysler. Workers have said they will oppose any sale if it means more job cuts, or cuts in pay or retirement benefits like health care. Not only that, the company is said to have at least fifteen billion dollars too little in its retirement plan.
And that's the VOA Special English ECONOMICS REPORT, written by Mario Ritter. Transcripts and audio archives of our programs are at voaspecialenglish.com. I'm Steve Ember.