DaimlerChrysler investors are cheering the news that the company is circulating Chrysler's financial information to prospective buyers. DCX shares have gained 5.5% since last Wednesday, when the company announced it was keeping "all options open" with regard to Chrysler, and reached a 5.5-year high in Frankfurt. J.P. Morgan Chase is circulating an investment book containing private data on Chrysler to interested parties and DaimlerChrysler has reportedly opened talks with GM on a possible sale. Renault and PSA Peugeot-Citroën, both of which have been out of the U.S. market for 15 years, are also said to be interested. Other possibilities include sale of the unit to a private equity firm or a spin-off to shareholders. Chrysler, which is on the wrong end of the American public's burgeoning interest in more fuel-efficient cars, is substantially responsible for a 40% drop in DaimlerChrysler's Q4 net income to $749 million. There is wide divergence of opinion on Chrysler's value once its liabilities, particularly regarding healthcare, are taken into account, with some analysts valuing it at negative 3 billion euros and other at positive 5 billion euros ($6.6 billion). Daimler-Benz paid $36 billion for Chrysler. Regardless whether or not it succeeds in selling off the division, DaimlerChrysler is planning to cut 13,000 (16%) of Chrysler jobs over the next three years and save about $4.5 billion in costs.
Sources: New York Times, Wall Street Journal, MarketWatch
Commentary: Daimler-Chrysler: Does Divorce Really Loom? - Barron's • DaimlerChrysler Earnings: Chrysler Weak, Mercedes and Trucks Strong • DaimlerChrysler Takes a Serious Look at Chrysler Spinoff -- German Papers
Stocks/ETFs to watch: DaimlerChrysler AG (DCX). Competitors: Ford Motor Co. (F), General Motors Corp. (GM), Toyota Motor Corp. (TM). ETFs: iShares MSCI Germany Index (EWG)
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