Chrysler suitor back in town

Cerberus visits Auburn Hills again; analyst says Magna is frontrunner

Bill Vlasic / The Detroit News

A team from Cerberus Capital Management is scheduled to meet today for a second time with Chrysler Group executives as the bidding war intensifies for the U.S. division of DaimlerChrysler AG.

The visit by Cerberus to Chrysler's Auburn Hills headquarters is an indication that prospective buyers are refining their offers to buy the struggling American automaker, according to people close to the situation.

Cerberus, one of the nation's biggest private-equity firms, had a first round of in-depth meetings last month with Chrysler executives. Two other leading contenders -- Canadian supplier Magna International Inc. and a partnership of the Blackstone Group and Centerbridge Partners -- have also visited Auburn Hills.

Intensive discussions are ongoing between all three bidders and DaimlerChrysler executives. People close to the discussions say DaimlerChrysler will likely narrow the field soon to one or two bidders.

A fourth bidder, billionaire financier Kirk Kerkorian, has made a $4.5 billion cash offer for Chrysler. However, DaimlerChrysler has shown no indication it will enter into serious negotiations with Kerkorian.

People familiar with the process said Cerberus officials will get a closer look today at internal Chrysler data and operations. The Blackstone team and Magna may get similar consideration as the initial phase of bidding winds down.

DaimlerChrysler essentially put Chrysler up for sale Feb. 14 when CEO Dieter Zetsche said "all options" were under consideration for the troubled division.

Since then, the potential breakup of the 1998 merger of Daimler-Benz AG and Chrysler Corp. has riveted the automotive world.

Under increasing scrutiny is the role DaimlerChrysler's unions may play in a sale.

Earlier this week, Jerry Dias, an official with the Canadian Auto Workers, told The Detroit News and other media outlets that the CAW, the United Auto Workers and the German union IG Metall favored the bid by Magna over offers from private-equity firms.

However, UAW President Ron Gettelfinger on Friday denied the unions collectively endorsed Magna's bid. In an interview with Detroit radio station WJR-760, Gettelfinger repeated his earlier position that Chrysler should remain within DaimlerChrysler.

Industry Analyst, Bret Hoselton of KeyBanc Capital Markets, said Friday he believes "there is an increased likelihood" Magna will end up owning a significant stake in Chrysler.

Hoselton said Magna, along with its financial partner Onex Corp., is "the leading contender for Chrysler." Hoselton said that, according to industry sources, the UAW is "amenable" to a Magna deal and had already offered "a framework concession package" to the Canadian firm.

In a research report, Hoselton said he expects Magna and Onex to value Chrysler in the "mid-to-high $5 billion range."