DaimlerChrysler AG officials confirmed weeks of conjecture and rumours for the first time on Wednesday, saying they have been in talks with prospective buyers of its struggling Chrysler unit.
CEO Dieter Zetsche said the company is in discussions with parties that have a "clear interest" in buying the money-losing Chrysler unit. He would not give details of discussions.
"I can confirm that we are talking with some of the potential partners who have shown a clear interest," Zetsche said in introductory remarks at the annual shareholder meeting of the world's fifth-biggest carmaker.
Zetsche stunned the automotive world on Feb. 14 when he said that "all options are on the table" for Chrysler after the unit ended 2006 with a loss of US$1.5 billion.
The company also said it would cut 13,000 jobs and reduce production capacity by 400,000 units as part of a "recovery and transformation plan,'' aimed at bringing Chrysler back into profitability by 2008.
Zetsche, dubbed "Dr. Z" for his fans, did not say on Wednesday whether any decision to sell Chrysler had been made.
"It is also true that we need to keep all options open, and that I cannot disclose any details, because we need to have the maximum scope for maneuver," he said.
"So far I am satisfied with the process. Everything is going according to plan."
The CEO would not identify any of the companies involved, but there has been speculation that Canadian auto parts supplier Magna International Inc. could be one.
Magna and an unnamed private equity partner have set a joint letter offering $4.6 billion to $4.7 billion for Chrysler, according to a letter from KeyBanc Capital Markets analyst Brett Hoselton, who cited unknown sources.
Magna founder and chairman Frank Stronach has confirmed his firm's interest in assuring the future of Chrysler, a major Magna customer.
But Stronach has also said Magna will not put itself into a position of competing against its other auto-industry customers.
Other companies rumoured to be in the bidding for Chrysler are major private equity firms Blackstone Group and Cerberus Capital Management LLP.
The Detroit News cited people familiar with the talks, saying the carmaker is looking to sell the unit for about $8 billion.
The newspaper also said that Cerberus, Blackstone and Magna had all submitted their formal offers and that DaimlerChrysler was expected to choose one of them as the sole negotiating partner by the end of the month.
The stock is up 25 per cent since Feb. 14 when the company said the U.S. unit could be sold.
