Advertisement

Daimler-Benz and Chrysler confirm US$35b merger talks but analysts question

Reading Time:3 minutes
Why you can trust SCMP
0

German industrial giant Daimler-Benz, maker of Mercedes-Benz luxury cars, and Chrysler Corp, the third-largest US car-maker, confirmed yesterday they were in talks to merge in a deal that could be worth US$35 billion.

Daimler stressed there would be no assurance an agreement would be reached or that a business combination would be implemented, but the group's shares soared 9 per cent in early trade as Daimler said any deal would involve a stock-swap.

'Chrysler would be the ideal partner for Daimler because of its product palette,' an analyst said. 'Chrysler is very strong in light trucks in the US and there is hardly any production overlap.' A merger between the two companies would make it the world's fifth-largest manufacturer of cars and light trucks, and give it combined annual revenues of $130 billion and pre-tax profits of $6.95 billion.

It would employ about 412,000 people, and have a combined market capitalisation of $80.17 billion.

Daimler's board was scheduled to meet yesterday to discuss the possible merger and Chrysler's directors also had a scheduled board meeting.

The deal would give Chrysler a much stronger presence in the recovering economies of Europe, where it has so far experienced poor performance, and could serve to solve some of the chronic over-capacity problems.

Advertisement