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Excerpt from Barron's Weekly Magazine. Receive all our excerpts by signing up here:

For Auto Workers, a Bitter Pill From Dr. Z by Jay Palmer

Summary: Daimler-Chrysler (DCX) CEO Dieter Zetsche's recent suggestion of struggling Chrysler unit's split or sale may be in retaliation for the Auto Worker Union's [UAW] refusal to agree to the same wage and health care cuts as Ford (NYSE:F) and General Motors (NYSE:GM) workers. Zetsche could use a sale as leverage in upcoming plant closing and wage negotiations with the UAW – who contend that Mercedes' strong earnings, which saw DCX climb 40% over six months to $73, don't necessitate worker concessions. Investors are hoping a Chrysler/Mercedes divorce will help revive both units' fortunes. Bulls say the stock could go to $80 if a buyer were found. But recently quashed rumors of a GM buyout underscore a sale/spin-off's challenges: 1) Chrylser's $1.5 billion loss in 2006, and more on the way. 2) Ongoing UAW wage disputes and worker financial obligations that are crushing profits - pensions and health-care costs already add $1,000 to every car. Daimler probably won't have to sell Chrysler as rival BMW sold Rover, for $15 in 2000, but it will be far below Chrysler's $38b 1998 price tag. Barron's Bottom Line: An $80 potential upside in a DCX split, but its troubles make Chrysler currently "unsaleable".

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Daimler-Chrysler Investment

Source: Daimler-Chrysler: Does Divorce Really Loom? - Barron's