More than a decade later, Kirk Kerkorian can't seem to get Chrysler out of his mind.
The billionaire tycoon unsuccessfully tried to buy the automaker in 1995 for $22.8 billion and then lost a bitter court fight over Chrysler's so-called "merger of equals" with Daimler-Benz in 1998.
Now the 89-year-old former movie mogul wants one more shot at buying the troubled automaker from its unsatisfied German owners and is reaching out to the company's executives and workers.
Kerkorian's wholly-owned investment company, Tracinda, on Thursday made a $4.5 billion cash offer for DaimlerChrysler's U.S.-based Chrysler unit.
Kerkorian's bid, about one-fifth of what he offered in 1995, reflects the falling fortunes of Chrysler Group, which lost $1.5 billion last year and has announced 13,000 job cuts in North America and reduced production.
A deal would put Kerkorian in charge of Chrysler a decade after he claims he was tricked out of potentially billions of dollars in the deal which married Daimler-Benz and Chrysler.
Lower Than Magna Offer
The offer disclosed Thursday from Tracinda is slightly lower than at least one competing bid from Canadian auto-parts supplier Magna International, worth a reported $4.7 billion.
Tracinda said it would place a $100 million deposit for the right to exclusive bargaining rights.
But CNBC's David Faber reported that Chrysler is unlikely to accept such an agreement.
"If you’re running an auction, why would you be bullied to agree to exclusivity for one potential buyer? You’ll take your time, do what you can to get the best price," Faber said. "If (Tracinda) came in with some unbelievable number, that would be one thing, but $4.5 billion –- at least by most accounts -– that wouldn’t seem to be enough to push it off."
Still, George Mogliano, Global Insight's director of automotive research, had a more positive take on the offer's chances.
"This offer is a real blockbuster move -- it has a lot going for it," Mogliano said on CNBC Thursday. He explained Kerkorian "wants to invest in Chrysler and keep it running instead of breaking it up."
The bid is "full of carrots and sticks," Mogliano said. "One, [Kerkorian is] coming with an offer that's a little low; two, he's trying to get the union involved -- the hidden kicker in this thing." Tracinda in a statement said it wants "to build and strengthen" the troubled automaker and "will offer the UAW and Chrysler management the opportunity to participate as equity partners in the transaction."
DaimlerChrysler shares climbed $3.81, or 4.7%, to close at $84.80 on the New York Stock Exchange after rising to a new 52-week high of $84.90 earlier in the session.
California-based Tracinda said its offer is subject to Chrysler reaching a new collective bargaining agreement with the United Auto Workers as well as a deal with DaimlerChrysler on sharing the estimated $22 billion unfunded pension liabilities and health care costs of Chrysler retirees.
A message seeking comment was left Thursday with a UAW spokesman.
Cursory Talks With UAW
CNBC's Phil LeBeau reported that Tracinda has had cursory, direct discussions with the UAW regarding its pitch for Chrysler.
Russell Phillips, union steward for UAW Local 1700, said word of a possible sale began filtering through the Sterling Heights, Mich., assembly plant Thursday afternoon. Phillips, a 20-year Chrysler employee, said he thinks the UAW would be interested in listening to such an offer from Tracinda.
"It would be very interesting if we can get something like that so we can help our members," Phillips said. "A lot will depend on how open they are going to be with the UAW and if they really are willing to sit down and talk with us."
Analysts said the deal would be difficult for Kerkorian to pull off because of his turbulent history with Chrysler and the size of the company's large legacy costs.
"I'm not sure what Kirk brings to the party except he can't help himself when it comes to playing with Chrysler," said David Healy, an analyst with Burnham Securities.
But David Cole, chairman of the Center for Automotive Research in Ann Arbor, Mich., said any deal would require an arrangement with labor on the legacy costs and noted that Tracinda adviser Jerome York has a long history of working with the UAW.
Tracinda said it's ready to start a more extensive review of Chrysler's financial books right away and believes it could complete it within 60 days.
Satisfied With Process
Han Tjan, head of corporate communications for DaimlerChrysler in New York, said the German-American automaker is talking with partners about a sale and that the chairman is satisfied with the process.
"All of our options are still open. For us to talk about (Tracinda) is speculation," Tjan said.
At least two groups in addition to Tracinda and Magna reportedly have expressed interest in Auburn Hills, Mich.-based Chrysler. Cerberus Capital Management and a consortium of investors led by Blackstone Group each have reviewed Chrysler's finances and are expected to make bids.
"As a matter of policy, we can offer no confirmation on any bid submission by Cerberus," said Cerberus spokeswoman J.J. Rissi. John Ford, a spokesman for Blackstone, said he could not comment on Tracinda's bid.
A message seeking comment was also left with officials from Magna.
Letter From York
In a letter to DaimlerChrysler Chairman Dieter Zetsche, Tracinda said it has been following the developments at Chrysler closely and has been studying available materials about the automaker.
"Having been a major shareholder for over a decade we are very familiar with both Chrysler and the automotive industry, and have come to believe, all factors considered, that a private ownership approach is in the best interests of all Chrysler constituencies," said the letter, signed by York, a former Chrysler Corp. executive.
The letter said it would be easier for a privately owned company to take a long-term approach "to build Chrysler into a robust and lasting, stand-alone entity."
Kerkorian long has had interest in automotive companies.
Late last year, he dumped the last block of what once was a nearly 10% share of General Motors, the world's largest automaker.
He had pushed for an alliance between GM, Nissan and Renault. GM's board voted to explore the possibility, but after three months of discussion, the idea was scrapped. York served as Tracinda's representative on the GM board but stepped down after the alliance talks fell apart.
Kerkorian, whose Tracinda was Chrysler's largest shareholder at the time of its 1998 merger with DaimlerBenz, sued the combined company in 2000. He claimed that Daimler-Benz engineered a takeover of Chrysler, then cheated him out of billions by casting the deal as a merger of equals. A federal judge rejected his claim.
Tracinda, which is named after Kerkorian's daughters, Tracy and Linda, has the majority stake in the casino and hotel operator MGM Mirage Inc.