INTERNATIONAL BUSINESS

International Business and Management

International Business and Management

Daimler and Chrysler Marriage of Horror

Mergers are risky and often fail. This was known to Daimler-Benz CEO Juergen Schrempp - but he wanted to do it better than any other and joined forces with U.S. automotive group Chrysler. It was the first large German-American fusion. And they ended up as a gigantic flop (Cartwright, Susan, et al, 2006, p. S1-S5).

That was a "marriage made in heaven" celebrated merger of Daimler and Chrysler already officially divorced almost two years ago - now it is completely out. After months of negotiations with the new owner Cerberus is the Stuttgart group's stake of 19.9 percent of the ailing manufacturer. In addition, the company waived the repayment of loans granted (Cartwright, Susan, et al, 2006, p. S1-S5).

7th May 1998: Daimler -Benz is no longer self-sufficient: A bride has her and is also found: She's from America, and is willing to say Chrysler. First, it's still quite nice and well behaved - no one wants to run over the other. From a "merger by exchange of shares in a common society" there is the question. The dirty word acquisition is avoided brave. The "bulldozer of Daimler-Benz," says Business Week calls the corporate CEO Juergen Schrempp, flowery: Daimler-Benz and Chrysler - which for him is a "marriage made in heaven, the" will (Cartwright, Susan, et al, 2006, p. S1-S5).

Daimler-Benz these days is worth 50 billion euros, 31 billion euros Chrysler. The Press is celebrating the big numbers: Converted nearly 118 billion euros in sales, 422 000 employees. And yet: the skeptical voices are not heard about: the companies fit together? If a merger makes economic sense? Less than a Mercedes dealer can not summarize the criticism: "What do they want only American with this crap" (Cartwright, Susan, et al, 2006, p. S1-S5).

18th September 1998: It is not only the largest-ever merger in industrial history, it is still easy to lift to. It passes no money. The bride is not purchased, but caused exchanged: 16,000 shareholders to vote at an extraordinary general meeting that they can exchange an old Daimler-Benz share in a new Daimler-Chrysler shares. Chrysler shareholders received for their papers only 0.6235 of Daimler-Chrysler (Cartwright, Susan, et al, 2006, p. S1-S5).

17th November 1998: The marriage is consummated, the stock market is now Daimler-Benz, Daimler-Chrysler. On this day, the company is worth nearly 72 billion euros. But the magic of the beautiful start of the burdens of everyday life begins to yield. First, it's all about the rewards of marriage. Juergen Schrempp, Daimler CEO earned as the equivalent of 1.4 million euros, his counterpart at Chrysler, Robert Eaton, EUR 10.2 million (Cartwright, Susan, et al, 2006, p. S1-S5).

An ugly difference. "As long as he earns more than Juergen Schrempp, Bob Eaton will have no problem to be number two," sneers the U.S. journal Automotive News. But the hastily installed "Compensation Committee" knows what it has to be done: The German wages up must be adapted to the ...