Chrysler - Case Study
CHRYSLER CORPORATION: NEGOTIATIONS BETWEEN DAIMLER AND CHRYSLER ∗
In January 1998, Jürgen Schrempp, CEO of Daimler-Benz A.G., approached Chrysler Corporation Chairman and CEO, Robert Eaton, about a possible merger, acquisition, or deep strategic alliance between their two firms. Schrempp argued that: The two companies are a perfect fit of two leaders in their respective markets. Both companies have dedicated and skilled work forces and successful products, but in different markets and different parts of the world. By combining and utilizing each other 's strengths, we will have a pre-eminent strategic position in the global marketplace for the benefit of our customers. We will be able to exploit new markets, and we will improve return and value for our shareholders. 1
Schrempp recounted, "I just presented the case, and I was out again. The meeting lasted about 17 minutes. / don 't want to create the impression that he was surprised. When the meeting was over, / said; 'If you thin I 'm naive, this is nonsense I 'm talking, just tell me. ' He smiled and said, "Just give me a chance. 'We have done some evaluation as well, and I will phone you in the next two weeks. ' I think he phoned me in a week or so. ,,2
Independently Eaton had concluded that some type of combination of Chrysler with another major automobile firm was needed: the firm was .currently financially healthy, but industry overcapacity and huge prospective investment outlays called for an even larger type of global competitor. Before seeing Schrempp, Eaton had polled investment bankers for their ideas about a major automotive merger, .and had spoken with executives from BMW on this topic.
Eaton replied positively to Schrempp 's idea of an industrial combination. Now lay ahead the task of forging the details of the agreement to combine. Robert Eaton appointed a small task force of business executives and lawyers to represent Chrysler in the detailed negotiations. Eaton challenged this team on
In January 1998, Jürgen Schrempp, CEO of Daimler-Benz A.G., approached Chrysler Corporation Chairman and CEO, Robert Eaton, about a possible merger, acquisition, or deep strategic alliance between their two firms. Schrempp argued that: The two companies are a perfect fit of two leaders in their respective markets. Both companies have dedicated and skilled work forces and successful products, but in different markets and different parts of the world. By combining and utilizing each other 's strengths, we will have a pre-eminent strategic position in the global marketplace for the benefit of our customers. We will be able to exploit new markets, and we will improve return and value for our shareholders. 1
Schrempp recounted, "I just presented the case, and I was out again. The meeting lasted about 17 minutes. / don 't want to create the impression that he was surprised. When the meeting was over, / said; 'If you thin I 'm naive, this is nonsense I 'm talking, just tell me. ' He smiled and said, "Just give me a chance. 'We have done some evaluation as well, and I will phone you in the next two weeks. ' I think he phoned me in a week or so. ,,2
Independently Eaton had concluded that some type of combination of Chrysler with another major automobile firm was needed: the firm was .currently financially healthy, but industry overcapacity and huge prospective investment outlays called for an even larger type of global competitor. Before seeing Schrempp, Eaton had polled investment bankers for their ideas about a major automotive merger, .and had spoken with executives from BMW on this topic.
Eaton replied positively to Schrempp 's idea of an industrial combination. Now lay ahead the task of forging the details of the agreement to combine. Robert Eaton appointed a small task force of business executives and lawyers to represent Chrysler in the detailed negotiations. Eaton challenged this team on