Merger and Acquisition Case
UV0085
Version 2.2
CHRYSLER CORPORATION: NEGOTIATIONS BETWEEN DAIMLER AND CHRYSLER
In January 1998, Jürgen Schrempp, CEO of Daimler-Benz A.G., approached Chrysler Corporation’s chair and chief executive officer (CEO), Robert Eaton, about a possible merger, acquisition, or deep strategic alliance between their two firms. As Schrempp argued: 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 preeminent 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 later: I just presented the case, and I was out again. The meeting lasted about 17 minutes. I don’t want to create the impression that he was surprised. When the meeting was over, I said, “If you think I’m naïve, 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.
1 2
Press release, Daimler-Benz A.G., 6 May 1998. “Gentlemen, Start Your Engines,” Fortune (8 June 1998): 140.
This case was prepared from public information by Robert F. Bruner, Petra Christmann, and Robert Spekman and by Assistants Brian Kannry and Melinda Davis. It is intended to
Version 2.2
CHRYSLER CORPORATION: NEGOTIATIONS BETWEEN DAIMLER AND CHRYSLER
In January 1998, Jürgen Schrempp, CEO of Daimler-Benz A.G., approached Chrysler Corporation’s chair and chief executive officer (CEO), Robert Eaton, about a possible merger, acquisition, or deep strategic alliance between their two firms. As Schrempp argued: 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 preeminent 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 later: I just presented the case, and I was out again. The meeting lasted about 17 minutes. I don’t want to create the impression that he was surprised. When the meeting was over, I said, “If you think I’m naïve, 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.
1 2
Press release, Daimler-Benz A.G., 6 May 1998. “Gentlemen, Start Your Engines,” Fortune (8 June 1998): 140.
This case was prepared from public information by Robert F. Bruner, Petra Christmann, and Robert Spekman and by Assistants Brian Kannry and Melinda Davis. It is intended to