Angry shareholders confront D/C management over Chrysler

Angry shareholders confront D/C management over Chrysler
Zetsche confirms talks with potential partners over future of US unit

Jason Stein | Automotive News Europe / April 4, 2007 - 5:10 am /
UPDATED: 4/4/07 6:48 a.m.

BERLIN - Shareholders strongly criticized DaimlerChrysler CEO Dieter
Zetsche and D/C's management during the annual shareholder meeting
here today.

In heated remarks, shareholder after shareholder criticized D/C's
supervisory board for not moving fast enough to sell the loss-making
Chrysler group.

D/C has said it is considering all options, including the possible
sale, of Chrysler which lost ?1.1 billion last year.

But shareholders said the company is not moving fast enough.

"Chrysler is the worst problem in the group. It has been a patient for
so many years and a burden for some time. I don't understand why you
are so hesitant," said Hans-Richard Schmitz, a lawyer representing the
German Association for the Protection of Shareholders. "The only thing
to do is execute a separation. You are underestimating how poisonous
this pill can be for your company."

Henning Gebhardt, a fund manager at DWS Investment in Frankfurt, an
asset management company, also criticized the D/C board for its
continued involvement with Chrysler.

"Since this so-called 'marriage made in heaven' we have seen a drop in
the share price by 30 percent," Gebhardt said in front of some 9,000
shareholders inside Berlin's exhibition center. "Should there be a
divorce, we would be very happy."

As for Chrysler's loss in 2006, Gebhardt asked the board how it could
have underestimated Chrysler's performance.

"How could it happen that you could be so surprised by the results?"
he asked. "The Japanese manufacturers better evaluated the market.
What we have seen is all the more disappointing. We have given you a
lot of credit in the last year Mr. Zetsche. Unfortunately, you have
used most of it up. We hope the strategy of Daimler and Chrysler is
ended."

Shareholder Ekkehard Wenger put forth a motion for the company to
revert back to its original name, Daimler-Benz AG. He was more blunt
about Mercedes' relationship with Chrysler.

"For nine years you have been sitting on this scrap heap called
Chrysler," he said. "What have you been doing for nine years? Nobody
has learned anything. To call this a sale is a euphemism. If you pay
for the garbage man to empty the dust bin, then does that mean you
have sold something to the garbage man?"

Zetsche told shareholders at today's meeting that the company is
talking with interested parties regarding the future of the Chrysler
group.

Zetsche announced on February 14 that continued losses and fierce
competition in the US meant that the German-American automaker was
considering all options for its Chrysler unit, and did not rule out a
possible sale, saying only that all options were being considered.

"As announced on February 14, we are open to all options for future
collaboration with Chrysler. The statement is still true today,"
Zetsche said.

He said that the talks have been with "potential partners who have
shown a clear interest" and "so far, I am satisfied with the process.
Everything is going according to plan."

He would not elaborate on who was involved in the talks.

"I cannot disclose any details, because we need to have the maximum
scope for maneuver," he said.

Press reports say Magna International and private equity groups
Cerberus Capital Management and the Blackstone Group have submitted
offers to buy Chrysler.

Zetsche told shareholders D/C is still examining all options for
Chrysler.

"We have experienced a major setback and failed to meet our targets.
We are open to all options for future collaboration with Chrysler," he
said. "We are looking for the best possible solution for Chrysler
group and for DaimlerChrysler. We are convinced to have a good basis
with a recovery plan to return to profitability."

Zetsche said D/C executives are still interested in shared projects
between Mercedes and Chrysler.

"We want to continue the shared projects between the Chrysler group
and the Mercedes car group that make financial sense for both sides,"
he said.

D/C is expected to choose one bidder as an exclusive negotiating
partner by the end of April, it said.

D/C is hoping for a price of about $8 billion for Chrysler, according
to Reuters.

German D/C shareholders said the 1998 merger between Daimler-Benz and
Chrysler has not worked because of cultural differences.

"The company is split between an American mentality and a German way
of thinking," Georg Nuemeier, a shareholder from Burgau, Germany, told
Automotive News Europe before the meeting. "Germans care about quality
and technical expertise. Americans only want money. They don't care
about the craftsmanship of the product. This is an arrangement that
must end."

Said Klaus Fiereck, a shareholder from Stuttgart: "Ten years should
have resulted in a better return. The fact is just that the marriage
never worked." Fiereck wants a name change to Daimler-Benz. "That is
our history," he said.

Separately, media reports Wednesday said members of the Canadian Auto
Workers, the United Auto Workers and German unions met Tuesday night
for more than three hours to plan their strategies and reiterated that
Chrysler should not be sold or, if it is, that any deal should not
lead to major job cuts.