Word: chryslers
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...AUDITORIUM AT THE CHRYSLER technology center in Auburn Hills, Michigan, was dense with emotion three years ago when Lee Iacocca attended the company's annual meeting for the last time as chairman of the board. A few months earlier he had agreed to step aside in favor of Robert Eaton, a former General Motors executive who was Iacocca's own choice to succeed him. Now here he was at 67, having brought the giant carmaker back from the edge of bankruptcy twice in 10 years, summing up a fabled career. Though he had lived every boy's dream of becoming...
...chase. Last week Iacocca stunned Wall Street and the auto industry by joining with the billionaire investor Kirk Kerkorian, 77, in a spectacular bid to take over the nation's third largest automaker. After three months of downward drift in the value of Chrysler stock, Kerkorian offered investors $55 a share, a 40% premium over the $39.25 price it posted one day before the bid went public...
Iacocca is just the opposite. In the same breath that he denies any ambition to return to management, he sketches out plans for the company's future. Though he brings a relative pittance to the deal in Chrysler stock--about $50 million--the value of his reputation, and the credibility it lends to Kerkorian, is priceless. And as Iacocca knows, with this deal he again puts it on the line. Revered as the man who would not let Chrysler fall, could he also be a man unable...
Eaton was in New York when he got news of the bid in a phone call from Kerkorian. To placate Kerkorian, he had already agreed in November to raise Chrysler's dividend and start a $1 billion stock-buyback program to increase the company's share price. But here was a move that left nothing to talk about. "I'm going to fight you on this," he told Kerkorian. Canceling a speech at the New York Auto Show, Eaton flew back to Detroit to huddle with the board. No sale, they announced late that night, especially since Kerkorian was planning...
...Chrysler is already at risk, or at least in play. Kerkorian's bid means that the company's managers will have to scramble to defend themselves. In 1990, in the midst of a recession that brought the company to the edge of bankruptcy for the second time in a decade, Kerkorian's Tracinda Corp., named for his daughters Tracy and Linda, started buying Chrysler stock at $12.37 a share. By now he has spent about $676 million accumulating a 10% stake. Noting that he had not lined up a cent in financing for his takeover bid, some Wall Street analysts...