APRIL 15, 2005
Breaking up DaimlerChrysler
There are some interesting reports doing the rounds that DaimlerChrysler shareholders are being approached by private equity firms seeking to buy the company and break it up into different companies. Deutsche Bank, the leading shareholder with 10.4%, has received a number of approaches, as has the Kuwait Investment Authority, which owns 7.2% of the stock. No-one is admitting to the approaches but it is clear that the investment community believes the company makes more sense if it is broken up. The company currently has a market capitalization of around $41bn.
This has reduced significantly since it started trading on the New York Stock Exchange in 1998 when the market capitalization was $84bn. At the time the architect of the merger with Chrysler, Jurgen Schrempp, said that the firm would become the world's most profitable car manufacturer. Today that seems an empty boast as Toyota accelerates away with a market value of $126bn. Investors are less than happy at the developments but it is not yet clear whether they will be tempted by the idea of a break-up.
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