CAW Says “No” to Kerkorian’s Chrysler Bid

CAW Says “No” to Kerkorian’s Chrysler Bid

The $4.5 billion bid for Chrysler from Las Vegas billionaire Kirk Kerkorian and his Tracinda Corp. has been rejected by the head of the all-important Canadian Auto Workers union as well as a German analyst.

CAW President Buzz Hargrove told the press Tuesday that he opposes Kerkorian’s offer, even though it offers Chrysler’s union an equity stake in the automaker. “I am not interested in Kerkorian’s style. His whole history has been to make money by taking advantage of throwing a lot of people out of work. He’s the guy I am totally opposed to.”

Christopher Stuermer, an auto analyst with Global Insight in Frankfurt, Germany, criticized Kerkorian for his low-ball bid; the $4.5 billion bid is half of what Global Insight estimates Chrysler’s valuation of $9 billion. Stuermer added that Kerkorian “is the last person on earth” DaimlerChrysler executives want to deal with “after all the upheaval he has been causing.”

Chrysler’s unions haven’t publicly said so but word is of the offers now on the table, the deal likely to be most favored by Chrysler unions is an offer from Canadian auto supplier Magna International with private equity firm Ripplewood.

As reported here Tuesday, Chrysler’s unions, in one way or another, will be the deciding factor in who ultimately buys the Chrysler Group. And it’ll likely come down to which buyer is most palatable to the union while meeting DaimlerChrysler’s requirements.

Kerkorian’s deal is clearly at the bottom, as the CAW’s Hargrove has publicly said, while the bid by Cerberus Capital Management also ranks low because the unions suspect the private equity firm will strip Chrysler to its distribution network.

Kerkorian is not popular with DaimlerChrysler management either. There’s a long history of bad blood between DaimlerChrysler and Kerkorian.

Exactly 12 years ago, Tracinda, which acquired a 9.8 percent stake in Chrysler in 1990, made a run for purchasing the automaker outright. Chrysler’s board rejected the leveraged buyout offer, and later, in 1998, accepted a bid from Daimler-Benz, initially positioned as the now famous “merger of equals.” Tracinda sued DaimlerChrysler, charging the so-called merger was unfair to Chrysler’s American shareholders. A federal judge later ruled in DaimlerChrysler’s favor but the company settled other similar claims by pension funds. The affair proved expensive and left DaimlerChrysler with a bad taste for Kerkorian.

Michelle Krebs:  is Editor-in-Chief of AutoObserver.com. Follow @AutoObserver on Twitter.