Word: chryslers
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There are lots of details that can strangle a $48 billion merger--different accounting practices, the need to rationalize information technology, patent ownerships--and Tom Stallkamp thought he'd worked through them all. As president of Chrysler, he had helped orchestrate the American company's merger with Germany's Daimler-Benz. But last November, as the new outfit, DaimlerChrysler, approached the date it would debut on the New York Stock Exchange, the whole thing stalled seemingly over whether the company would use American- or European-size business cards. The more tradition-bound Germans dug in their heels, not surprisingly...
...novelty has worn off--and with it the notion that DaimlerChrysler was a merger of equals. Just a year ago, the CEOs of Daimler-Benz and Chrysler Corp.--Jurgen Schrempp and Bob Eaton, respectively--made the surprise announcement that their two companies were going to combine. But Eaton, the executive who presided over Chrysler's transformation into America's hottest car company, ceded too much authority too early, giving the Germans an advantage in the high-stakes game of musical chairs that happens when two huge corporations marry...
Eaton was worried that in 10 years only six of the current 30 automakers would be around. Although Chrysler was hugely successful, he feared it would never have the financial muscle to best Ford and GM. That's why Schrempp needed a mere 17 min. around a coffee table in suburban Detroit in January 1998 to convince Eaton that a combination was a good idea...
...enthusiasm for the deal, Eaton acceded to an acquisition of Chrysler by Daimler-Benz. And over months of secret talks, Chrysler's leverage was whittled away. Although Chrysler was more profitable, Daimler-Benz was bigger. Although the Americans wanted the new company to be based in the U.S., German law made it impractical and expensive. Inevitably, a German-registered company was going to be dominated by German managers, and it is. When it came to money, though, Eaton won a handsome premium for Chrysler shareholders (and top Chrysler executives) in a head-to-head negotiation with Schrempp...
Eaton, now a lame duck, had basically surrendered Chrysler's power base. As Stallkamp had feared, the announcement undercut the Americans' influence with the Germans. He "abdicated," in the words of a DaimlerChrysler official. At a top-management seminar in Seville, Spain, last December, Eaton delivered a passionate speech on the new company and how its leaders had to band together to make it work. The oration left even Schrempp uncharacteristically at a loss for words. But by February the Germans were referring derisively to the speech as "Eaton's farewell...