RE risks:
Daimler, Chrysler discussing mega-merger
FRANKFURT (Reuters) - Germany's Daimler-Benz AG said
Wednesday it was in merger talks with U.S. car giant Chrysler Corp.
-- heralding what could become the biggest industrial merger ever.
Daimler said in a statement that no concrete deal had been struck
and that approval by both company boards was needed, but said the
two companies were considering a share swap that would enable
them to form a joint company.
Daimler said that "any agreement would be subject to approval by the
two companies' boards along side other conditions."
A report in the Wall Street Journal Europe estimated the value of the
deal at $35 billion.
Daimler's stock surged on the news as traders looked for an earnings
boom for the company on the back of cost reductions and strong
access to the lucrative U.S. car market.
Its shares were up six percent early Wednesday, having earlier hit a
high of 194.75 marks.
Talk of a merger between Daimler and Chrysler has been circulating
for some time but analysts said they had no idea a deal was
imminent.
"All that's missing is the contract and the approval from relevant
authorities," said Christian Breitsprecher, analyst at Trinkaus Capital
Markets, Duesseldorf, who said the deal would bring significant
earnings growth for Daimler, especially if it was accomplished in a
share swap.
"For Daimler this means two main things -- first, it will gain a strong
position in the biggest car market in the world.
"Second, the breadth of models it can produce with Chrysler will
mean enormous cost savings -- the spending on development will
simply be spread across a far wider field," Breitsprecher said.
Daimler said it and Chrysler would make no further comment until the
talks were concluded.
The Wall Street Journal said that Chrysler's directors were expected
to discuss the merger at a regularly scheduled board meeting
Wednesday. Daimler's board was to consider the deal this week.
TB,
could this be Daimler is betting future sales of luxury cars will be lower?.
rh |
