Behind the Wheel with Phil Lebeau

Chrysler Sale Options


As DaimlerChrysler begins to move forward with the possible sale of it's Chrysler division , two things are clear. First, there are a number of options for selling off the American automaker. Second, the leaks out of Europe continue to push GM as the most likely buyer.

Lets start first with the options. A report in the Financial Times says Daimler might be interested in taking a minority stake in General Motors as part of the world's largest automaker buying Chrysler in all stock deal. This is an interesting idea since it would let GM buy Chrysler without a major cash outlay. It also could help Daimler sell Chrysler at a higher price point . But that's just one of the options the German automaker is likely to consider. Another possibility floating around Detroit and Wall Street is a private equity firm teaming up with an established automaker to buy Chrysler. For example, GM could partner up with Cerberus Capital. This would let GM put up a portion of the money needed, and in essence a portion of Chrysler and some of the pension liabilities, while it's private equity partner would take the rest. This is an appealing possibility because it would again not require as much of a cash outlay for GM or any other established automaker interested in buying Chrysler. At the end of the day, the automakers need that flexibility because few have the financial strength to come up with billions that will be needed to close this deal.

Now let's talk about GM. It's clear from the stories coming out of Europe that there is both momentum and a fair amount of interest in GM buying Chrysler. Some of this you can attribute to early reports that GM CEO Rick Wagoner and his top executives were discussing a possible buy with DaimlerChrysler CEO Dieter Zetsche and his top lieutenants. But there's something else at play here as well. In talking with money people on wall street there is a genuine sense of momentum for GM to make a deal. That doesn't mean it will happen. A lot could happen, especially with private equity, to keep GM from winning Chrysler. But compared to when DaimlerChrysler first announced on Valentine's Day that it would consider selling Chrysler, there is a greater sense that GM buying Chrysler not only could happen, but also could make sense if structured the right way.

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