US Investor Eyes Chrysler

Kerkorian's personal holding company Tracinda Corp. said in a statement the offer would aim to "build and strengthen Chrysler as an independent entity."

The 89-year-old casino mogul, who failed in his 1995 hostile takeover bid of Chrysler, indicated his firm would offer an equity partnership to the United Auto Workers (UAW) and senior management of Chrysler as a means of gaining their commitment to his long-term solution.

But Tracinda said the offer hinges on reaching a deal with DaimlerChrysler on sharing Chrysler's massive pension and health care liabilities and getting the UAW to agree to a "new satisfactory collective bargaining agreement" in negotiations this fall.

"Tracinda believes by taking a long-term approach to solving Chrysler's problems, it can become a robust and lasting, stand-alone entity," the statement added.

DaimlerChrysler open to "all options"

Tracinda offered DaimlerChrysler a 100-million dollar deposit in exchange for exclusive due diligence rights, which it said it could complete in 60 days.

DaimlerChrysler spokesman Han Tjan declined to comment on the Tracinda bid but reiterated chairman Dieter Zetsche's statements Wednesday confirming that the company is in talks with interested third parties and that "all options" are on the table.

A representative from the United Auto Workers was not immediately available for comment.

Kerkorian, who last made headlines with his failed bid to push General Motors Corp. into an alliance with Renault-Nissan, was Chrysler's largest individual shareholder at the time of the 1998 merger with Daimler-Benz.

He later launched a lawsuit trying to recover billions in damages after he said the companies misled investors about the nature of the deal.

Dream marriage on the rocks

Nine years down the line, what was originally billed as a "dream Marriage" of Daimler and Chrysler now appears to be on the rocks.

In what appeared to be a last-ditch attempt to turn the unit around, DaimlerChrysler unveiled in February plans to slash 13,000 more jobs and close two more plants at its loss-making US subsidiary and said it would consider "all options."

Chief executive Dieter Zetsche confirmed Wednesday that it was in talks over a possible sale of Chrysler but revealed few details at the group's annual meeting in Berlin. A number of shareholders at the meeting called for a rapid sale.

Analysts estimate Chrysler's value at between five and seven billion dollars, compared with its purchase price of more than $ 35 billion. Despite a series of restructuring plans, Chrysler posted an operating loss of 1.12 billion euros last year as consumers shied away from the fuel-hungry trucks and sports utility vehicles that had dominated its offerings.

The company is reportedly considering firm offers from private equity firms Cerberus and Blackstone, and Canadian car parts maker Magna, which is also likely to team up with an investment fund.

The head of the Canadian Auto Workers has expressed a preference for Magna out of concern that a private group would be less committed to building the business.

Kerkorian among wealthiest Americans

Tracinda said in a letter to Zetsche that "a private ownership approach is in the best interest of all Chrysler constituencies."

Tracinda representative Jerry York said it would take five to seven years to rebuild Chrysler by shifting the product mix towards "greener" segments, improving product quality to eliminate a consumer bias towards Asian products and speeding up the introduction of new models in order to compete with Asian automakers.

Tracinda's attempt to get the union to accept an equity stake as a way to diffuse health care costs could bode well for the other US automakers, said JP Morgan analyst Himanshu Patel.

"If the UAW proves supportive of Tracinda's bid, we think it could have positive ramifications for GM and Ford, as it may signal the union's willingness to negotiate solutions to healthcare at the upcoming contract renewal talks," he wrote in a research report.

Kerkorian was ranked 26th in a Forbes magazine list of the wealthiest Americans, with a net worth estimated at nine billion dollars. His chief holding is MGM Mirage, which owns about half of the hotel rooms on the Las Vegas strip.

The son of an Armenian immigrant, Kerkorian grew up in Fresno, California. After dropping out of school, he boxed for a while under the moniker "Rifle Right," before joining the Royal Air Force to fly supply planes from Canada to Britain during World War II.

After the war, his love of flying and risk-taking drew him to Las Vegas, where the gambling industry was in its infancy.