Chrysler Ends Effort to Sell Subsidiaries
Chrysler Corp. said today it has taken down the “For Sale” signs at its defense, electronics and aerospace units that have been up since last December, after receiving no acceptable bids for the companies.
A spokesman for Chrysler Technologies in Washington said Chrysler will instead retain and nurture Electrospace Systems, Airborne Systems and Pentastar Electronics, which he said are all profitable.
Chrysler sold its Gulfstream Aerospace division last March for $825 million, after paying $637 million for the Savannah, Ga., corporate jet maker in 1985.
“We said at the time of the Gulfstream sale that Chrysler was not in need of cash,” Chrysler Technologies spokesman John Stellman said, adding that the No. 3 car maker currently has more than $4.3 billion on hand. “We didn’t find buyers so we are perfectly content to just continue owning them.”
In light of military cutbacks, Chrysler will instead concentrate on reducing the amount of defense business by those operations while increasing commercial sales, he said.
“Looking at their potential profitability, it makes better business sense to hold onto them than to discount the price,” Stellman said, adding that while these companies “don’t interact” with Chrysler’s vehicle business, “they don’t interfere with it either.”
“Part of our ongoing plan has been to move into more commercial-type work,” Stellman said. “We would like to increase that from 10% now to about 25% in the coming years.”
The three companies in Chrysler Technologies employ about 3,500 employees in Texas, Alabama and Virginia. While Chrysler does not disclose profits of its operating units, those companies posted $300 million in sales last year.
Industry analysts said Chrysler could still sell one or all of those companies if it were to get a good offer.
“It’s more that nobody decided to buy them,” said David Healy, of Barclays BZW in New York. “It’s probably true that Chrysler is under no particular gun to liquidate at this time since it does not have a cash squeeze. They’ve got more cash than they have had for some time.”
