Kirk Kerkorian is back.
The billionaire investor, an activist shareholder inCorp. before its 1999 merger with -Benz AG and more recently a key, prodding stakeholder in Corp., is making a pitch to buy Chrysler Group from DaimlerChrysler AG.
Kerkorian’s investment firm, Tracinda Corp., is offering $4.5 billion in cash forand is prepared to put up $100 million in a good-faith deposit as part of the due diligence process.
In a letter to DC’s supervisory board, published first by The Wall Street Journal on its website, Tracinda says its offer is based on an examination of publicly available documents and subject to a satisfactory completion of a more extensive due diligence. The firm says it is prepared to begin that process immediately and would look to complete it within 60 days.
The offer also would be subject to reaching a new, satisfactory collective bargaining agreement with the United Auto Workers union and an equitable arrangement with DC regarding the sharing of unfunded pension liabilities and health-care costs for Chrysler retirees, the letter says.
Tracinda says it would give the union and Chrysler management a chance to be co-investors in the auto maker.
“Tracinda intends to build and strengthen the assets of Chrysler as an independent entity by partnering with the UAW and senior management of Chrysler,” the letter says. “To this end, Tracinda will offer the UAW and senior management of Chrysler the opportunity to participate with Tracinda as equity partners in the transaction.”
In an accompanying letter to DC CEO Dieter Zetsche, Kerkorian right-hand advisor Jerry York says Tracinda would look to get Chrysler on a “product renewal cycle that is fully competitive with the Asian producers,” as well as shift the product mix toward greener segments and improve overall quality.
“The returns will not come quickly,” York notes.
But he says Chrysler doesn’t need “a ?quick fix’ that may show good results three or so years from now, only to have the company possibly slip into another crisis situation.”
DC would not comment on the proposal from Tracinda, and a DC spokesman says he is unsure whether the auto maker had received the letters in Germany.