THE BID FOR CHRYSLER : Investment Bank Won’t Advise Kerkorian : Autos: Chrysler officials say Bear Sterns executives told them the firm will not aid in takeover attempt.
Investment bank Bear Stearns & Co. will not help Kirk Kerkorian in his attempt to buy out Chrysler Corp., auto company officials disclosed Wednesday.
Bear Stearns officials declined to comment, but a Chrysler spokesman said top executives of the New York investment banking firm had phoned the auto maker’s senior managers to inform them of their decision.
“They said they would not sign up for the deal and would not participate,” said Chrysler Vice President Arthur Liebler. “They said they would do nothing that would be hostile to Chrysler.”
The decision comes against a background of growing criticism of the offer. On Wednesday, dealers’ groups and labor leaders urged Chrysler to resist the bid, and on Tuesday 18 major public pension funds expressed strong support for Chrysler’s management.
Kerkorian, one of the wealthiest individuals in America, announced April 12 that he wanted to buy the 90% of Chrysler shares he did not own for $55 a share. Chrysler’s board rejected the offer.
The total value of the deal would be $22.8 billion, including $2 billion in stock Kerkorian already owns. Kerkorian, 77, is being aided by former Chrysler Chairman Lee Iacocca, 70.
A spokesman for Tracinda Corp., Kerkorian’s Las Vegas-based operating company, said it had not officially retained Bear Stearns but that it had been receiving advice from the firm on financial options even before the proposal was made public. “Right now our concern is talking with commercial banks about financing this transaction,” Tracinda spokesman Michael Claes said. “This is not an area that we would need or seek Bear Stearns’ help.”
Kerkorian is close to Bear Stearns Chairman Alan Greenberg, and the investment firm has worked closely with the billionaire investor in some of his major hotel, casino and entertainment investments in the past.
Bear Stearns has also worked closely with Chrysler and has reportedly sold more than $4 billion in bonds for the auto maker’s financial services arm, which provides loans to car buyers and dealers.
“We’ve had a good relationship,” Chrysler’s Liebler said. “We are pleased with their decision.”
Chrysler is also putting pressure on its biggest banks not to finance Kerkorian’s bid, bankers familiar with the situation told Bloomberg Business News. Bankers said Chrysler officials are urging the company’s top banks to stay away from financing Kerkorian. Those banks include Chemical Banking Corp., Chase Manhattan Corp. and J.P. Morgan & Co.
The flurry of activity comes as support for Chrysler’s management appears to be growing in many camps.
Owen Bieber, president of the United Auto Workers union, called Kerkorian’s offer “a classic example of the ‘get-it-while-you-can’ mentality that wrecked so many American corporations in the 1980s.”
