- Messages
- 40,801
- Name
- Marcus
When he announced the sale of the Chrysler Group to Cerberus Capital Management, one of the follow-up questions put to Dieter Zetsche was whether the emerging Daimler AG could remain independent without Chrysler.
Zetsche emphasized the re-organized Daimler would have a very, bright future. In fact, the higher share prices brought on the sale of Chrysler should help protect the company from potential raiders, he said during the press conference at which the sale of the American half of the company became official.
Zetsche also dismissed suggestions that lack of one large shareholder, which is usually a deterrent to any takeover bid, and the wide distribution of shares, which means owners are looking to maximize their returns, leave the company vulnerable.
However, the next day when Bodo Uebber, the company's chief financial officer and one of the principal promoters of the Chrysler sale, fielded questions from analysts during the company's quarterly earnings conference call, it soon became apparent the Daimler AG would face all kinds of pressure.
Analysts quizzed Uebber about the disposition of the company's substantial cash reserves, estimated at between $15 billion and $18 billion, once it completes the deal with Cerberus. Daimler has promised to keep up to $1 billion in reserve to help shore up the Chrysler pension fund if needed in the next few years.
Uebber also was forced to deflect questions about larger dividends or special dividends for the company's shareholders. Uebber committed to nothing but the question is bound to come up again.
The huge cash hoard, however, is bound to make Daimler a tempting target for private equity firms or even other bidders.
Truck spin-off?
Another analyst asked with Chrysler gone, if time had come to spin off the truck group into an independent company. Uebber insisted Daimler was not in any way interested in spinning off the truck group.
The truck group and the Mercedes-Benz passenger car group share a common brand, he said. Moreover, the truck and car group will continue to share purchasing, research and development, particularly of diesel technology, as well as distribution channels, Uebber said, suggesting the two groups are more tightly integrated in many ways than Chrysler ever was.
The truck group is under some pressure because of slow sales in theU.S. but the outlook is for steady growth in all the globe's major markets, he added. The truck group's operating profit improved during the first quarter to $706 million from $564 million during the same period a year ago.
Meanwhile, the Mercedes-Benz car group is heading towards the peak of its cycle, having weathered the troubles that plagued it over the past couple of years. The Mercedes Car Group, despite an expensive model change for the new C-Class, posted an operating profit of $1.059 billion after losing $983 million in the first quarter of 2006. Big sales of high-end models such as the S-Class, E-Class, and the M-/R-/GL-/G-Class helped drive the improvement, Uebber said.
The steady income stream at both the truck group and car group, however, also could make the new company attractive to potential bidders. The symbolic value of the Mercedes three-pointed star also is bound to make it an attractive target in a global financial market awash with money and where new potential bidders seem to be emerging all the time.
Cerberus after all was was barely getting started five years and a Saudi consortium is now the leading bidder for General Electric's plastics business, which has done a lot of business with automobile companies over the years.
In addition, given the rapid change in the auto industry, other bidders could conclude that it might make sense to buy up Daimler shares and sock them away for the day when new auto companies looking for cachet of old brands emerge in China, India, or even Russia.
Daimler: What Comes After Chrysler? - The Car Connection
M
Zetsche emphasized the re-organized Daimler would have a very, bright future. In fact, the higher share prices brought on the sale of Chrysler should help protect the company from potential raiders, he said during the press conference at which the sale of the American half of the company became official.
Zetsche also dismissed suggestions that lack of one large shareholder, which is usually a deterrent to any takeover bid, and the wide distribution of shares, which means owners are looking to maximize their returns, leave the company vulnerable.
However, the next day when Bodo Uebber, the company's chief financial officer and one of the principal promoters of the Chrysler sale, fielded questions from analysts during the company's quarterly earnings conference call, it soon became apparent the Daimler AG would face all kinds of pressure.
Analysts quizzed Uebber about the disposition of the company's substantial cash reserves, estimated at between $15 billion and $18 billion, once it completes the deal with Cerberus. Daimler has promised to keep up to $1 billion in reserve to help shore up the Chrysler pension fund if needed in the next few years.
Uebber also was forced to deflect questions about larger dividends or special dividends for the company's shareholders. Uebber committed to nothing but the question is bound to come up again.
The huge cash hoard, however, is bound to make Daimler a tempting target for private equity firms or even other bidders.
Truck spin-off?
Another analyst asked with Chrysler gone, if time had come to spin off the truck group into an independent company. Uebber insisted Daimler was not in any way interested in spinning off the truck group.
The truck group and the Mercedes-Benz passenger car group share a common brand, he said. Moreover, the truck and car group will continue to share purchasing, research and development, particularly of diesel technology, as well as distribution channels, Uebber said, suggesting the two groups are more tightly integrated in many ways than Chrysler ever was.
The truck group is under some pressure because of slow sales in theU.S. but the outlook is for steady growth in all the globe's major markets, he added. The truck group's operating profit improved during the first quarter to $706 million from $564 million during the same period a year ago.
Meanwhile, the Mercedes-Benz car group is heading towards the peak of its cycle, having weathered the troubles that plagued it over the past couple of years. The Mercedes Car Group, despite an expensive model change for the new C-Class, posted an operating profit of $1.059 billion after losing $983 million in the first quarter of 2006. Big sales of high-end models such as the S-Class, E-Class, and the M-/R-/GL-/G-Class helped drive the improvement, Uebber said.
The steady income stream at both the truck group and car group, however, also could make the new company attractive to potential bidders. The symbolic value of the Mercedes three-pointed star also is bound to make it an attractive target in a global financial market awash with money and where new potential bidders seem to be emerging all the time.
Cerberus after all was was barely getting started five years and a Saudi consortium is now the leading bidder for General Electric's plastics business, which has done a lot of business with automobile companies over the years.
In addition, given the rapid change in the auto industry, other bidders could conclude that it might make sense to buy up Daimler shares and sock them away for the day when new auto companies looking for cachet of old brands emerge in China, India, or even Russia.
Daimler: What Comes After Chrysler? - The Car Connection
M
