Kirk Kerkorian Bidding for Chrysler Ag

by : Lisa Ziegler

Kirk Kerkorian an American billionaire and president/CEO of Tracinda Corporation, a private holding company based in Beverly Hills, California---has already filed his bid for Chrysler amounting to $4.5 billion. Mr. Kerkorian vision is to create a partnership with both labor and management sharing equally in the risks and rewards.

The billionaire financier has released a statement last Friday stating that his plans are nothing short of a transformation of Chrysler with consideration to the interests of all employees, investors, and executives. The billionaire's comments were viewed by most as a scheme to win over the support of the union group. It should be noted that the other Chrysler bidders were reported to be seeking union support. The declaration of Mr. Kerkorian offering workers part ownership in the automaker is expected to win over to his side the support of the union group.

Mr. Kerkorian is the very first bidder to declare publicly his offered price and strategy to partner with organized labor. "We believe the only realistic plan for Chrysler is one in which all parties share equitably -- with no one group (including ourselves) trying to gain an unfair advantage over the others," said Tracinda Corp., Kerkorian's investment firm.

Mr. Kerkorian with his surprised announcement has joined three other bidders in the competition to acquire the loss-making division of DaimlerChrysler. This is not the first time that the billionaire gentleman has tried to acquire Chrysler. Way back in 1995 he has tried to takeover Chrysler and now for the second time around he hopes to distinguish his bid from others by means of his open-ended offer that include management and the United Auto Workers in the ownership of the automaker.

Tracinda said, "What we are talking about is a transformation in the way risks and rewards in a large enterprise are shared." The Los Angeles-based Tracinda have not revealed further details on how a Kerkorian-owned Chrysler is going to be structured. Kerkorian's top aide, Jerry York was unavailable last Friday to provide comments.

Contrary to what people may think there were no UAW-Tracinda meetings that took place. The statement issued by Mr. Kerkorian was more of discussing his vision if ever he will be given the chance to own Chrysler. Mr. Kerkorian's offer brings to four the number of bidders that are competing for Chrysler ownership. The offer made by the American billionaire gentleman was based on the announcement made by DaimlerChrysler Chief Zetsche last February 14, 2007 when he said that all options were on the table to turn around the struggling arm, including the possibility of sale.

The other known bidders for Chrysler AG---maker of Jeep and its components like ---include Cerberus Capital Management, a partnership of private-equity firms Blackstone Group and Centerbridge partners and Magna International Inc. a Canadian auto supplier.

In the statement released by Tracinda last Friday the issue on "true partnership" was rather vague however the firm said that any arrangement between management and the labor group must be consensual.

Ron Gettelfinger, UAW President said in a radio interview last Friday that he has to speak with Kerkorian, York or any other Tracinda official about the controversial bid.

Gettelfinger has also decline in commenting on the idea of union workers owning stock in Chrysler. It can be remembered that Mr. Gettelfinger has previously criticized private-equity firms particularly for stripping and flipping the assets of troubled companies.

According to some people familiar with the possibilities, Mr. Kerkorian's offer includes rewarding the blue-collar employees with stock for the company's performance and giving the board representation to union leaders. On the other hand sources close to Cerberus and the Blackstone/Centerbridge group said that the two private-equity firms were also discussing stock-ownership deals and board seats just to gain the support of the union for their bids.

It is expected that sale process in Chrysler will heat up next week especially once executives of DaimlerChrysler and its investment banker J.P. Morgan Chase start deeper discussions with bidders. It is also probable that the German automaker will choose a single bidder to negotiate exclusively by the end of April.

The bid that the billionaire Kerkorian has made was the last one that DaimlerChrysler has received and came after the other three bidders had already made extensive on-site visits to Chrysler headquarters in Auburn Hills. CEO Zetsche told shareholders at the company's annual meeting that negotiations were already being conducted with interested parties however he declined on giving a particular date for the Chrysler sale.