How will current DXC shareholders be dealt with after Daimler sellsChrysler?

If, once upon a time, you owned shares in Chrysler, that were
converted to Daimler-Chrysler (DCX) shares when Daimler merged (or
bought) Chrysler, then will you regain your Chrysler shares if Daimler
sells Chrysler? Or will you simply retain the Daimler-Chrysler shares
(which I suppose will be called simply "Daimler") after Chrysler is
sold off?

 

Daimler absorbed Chrysler for one purpose and that was the ready
availability of Chrysler's cash reserves. They had no real intent of making
a go of it and the US should spit right in Daimler's face. Now that the
cash is gone Chrysler was sold no cash reserves, and with 500 million
dollars in the hole due to pension systems and retirements. The next step
will be chapter 11 people will loose their pensions and retirement and their
will be lay offs. The present group of owners are in it to produce a profit
this cannot be done in Chrysler's present solvency. Just my opinions and
observations.

Coasty

 

I think that the shareholders who are important enough to vote will
decide how that is handled. Then everybody else will have to go along
with it.

 

Cerberus is a private equity firm, not a public company. Daimler sold
Chrysler to Cerberus (well 80.1% of it) so Chrysler has now in effect gone
private. Your Daimler-Chrysler shares will in all probability soon return to
their former name, Daimler-Benz.

 

This is the correct answer. Prior shareholders will get nothing. The value
you lost was courtesy of whatever D-B mismanagement allowed them to buy a
company for 37B and then give it away free. You owned D-B during that, so
you share in the loss.

 

What was the value of DCX shares the moment they were created (in
what, 1998? 1999)?

I believe their current value is $86 (perhaps a side-question here is
how do DCX shares properly reflect both the Euro and the USD, given
that Daimer-Chrysler is (was) a hybrid European/American corporation
and the USD has seen quite a change in it's value compared with the
Euro recently).

If Daimler bought Chrysler for 37B, then who did they buy it from?
Who received that 37B?

And if Daimler spent $37B to access Chrysler's cash, then did Chrysler
have more than $37B in cash at the time?

 

Here's what I've got about the merger...

Daimler-Benz shareholders would get 1 share of Daimler-Chrysler for
each share of Daimler-Benz they held.

Chrysler shareholders would get about .5 share of Daimler-Chrysler for
each share of Chrysler they held. I think this is where the $37B
figure comes from. Did Daimler-Benz buy back their own stock to make
this swap, or just issue new shares? I don't know.

Chrysler had about $9-10 billion in cash reserves at the time.

I believe that the sans-Chrysler corporation is going to call itself
just Daimler, but I don't remember where I read that. DCX shareholders
will have shares in this 'new' Daimler.

steve s

 

Presumably, the conversion of 2-shares-Chrysler to 1-share-DCX would
have not resulted in any cost (cash or otherwise) to Daimler or
existing Daimler shareholders, nor would it have required Daimler to
issue new shares or dilute existing Daimler-Benz shares.

I still don't see how or where Daimer lost any cash or value when the
acquisition of Chrysler was transacted.

If so, then why have the German shareholders of DCX been trying to
crucify the executives of Daimler-Chrysler for the past year or two?

If the cash they looted from Chrysler was so lucrative, then why are
they upset with the executives (now) over the current state of this
amalgamated company?

 

My short answer is "I don't have a clue", ha! I guess Daimler-Benz
shareholders expected to make money from the merger, but when I look at
stock prices, I don't see that they did. In many ways, this is all so
much hocus-pocus to me, but...

I think Chrysler Corporation was trading around $48/share just before
the merger; Daimler-Benz was close to $100/share. Chrysler Corporation
shareholders got .54 shares of DCX, which represented a premium to them
of effectively about $53/share (there was an option for them to get a
special bonus which would have brought this to effectively .62 shares
of DCX...but I don't know if they got the bonus or not). Daimler-Benz
shareholders got 1 share of DCX per Daimler-Benz share. I see what
you're saying about Daimler just issuing new shares without diluting
the equity of their pre-merger shareholders. But, since the share
price just after the merger was about $80, I'd say the pre-merger
shareholders lost some money. If I looked all this up correctly, DCX
was trading at about $85 on Friday, but this was an increase from
earlier this year...probably a bit of a bounce from the "happy news" on
the sale of Chrysler.

I'm not a shareholder, just a MOPAR fan. But, from what I can see, if
I've got my numbers right, the pre-merger Daimler-Benz shareholder has
seen the stock price fall from nearly $100 to the $80 range. (No idea
here, what heights or depths the stock price has seen in intervening
years.) Of course, they'd prefer to be seeing the price rise by (at
least?) 7-10% per year, plus getting some dividends. I mean, compare
this loss to what they could have gotten just putting their money into
a CD or something... Remember, the shareholders didn't get the cash
reserves, DCX spent it.

I think Eaton and Schremp did pretty well, though.

Anyway, that's my very poor understanding of what happened. But
remember I'm not a Daimler fan...I liked Chrysler and didn't think they
needed the merger. I hope they can recover, but from what I've seen in
US corporations and 'high finance', I'm not holding my breath.

And anyone who understands this better than I do should jump in and
correct my errors, both in my numbers and my interpretation!

steve s

 

I agree with you, except for the killing of Chrysler by Cerberus.
I would expect them to lift the value of Chrysler over a few years
before the killing.

 

Chrysler had no "cash reserves." Check out the last Annual Report to
Stockholders before the merger. Or are you claiming they lied in
their report? That they had 2 sets of books?

But all the current debts are absorbed by Daimler, which is also
contributing $1 billion to the Chrysler group.

Can't happen. Pensions are guaranteed by the US government.

 

Well, I bought Chrysler at what amounts to $30 a share (correcting for
the conversion from my Chrysler shares to my DC shares). MY DC today
is going for $87 a share. If that's a loss, I want more!

 

Federal guarantees only cover a percentage of original pensions.