Daimler-Benz and Chrysler Merge
7 May 1998
Merger Agreement Signed: Daimler-Benz and Chrysler Combine to Form the Leading Global Automotive Company STUTTGART, Germany, and AUBURN HILLS, Mich., May 7 -- The
following was released today by Daimler-Benz AG and Chrysler Corporation:
-- Chrysler Chairman Robert J. Eaton: "World class products and
brands complement each other"
-- Daimler-Benz Chairman Juergen E. Schrempp: "Perfect fit of two
market leaders for further global growth"
-- Benefits of $ 1.4 bn expected in 1999 -- Annual benefits of $ 3 bn
expected to be reached in the next several years
-- No plant closures or lay-offs planned
-- Exchange ratio set at 0.547 DaimlerChrysler shares for each
Chrysler share - Each Daimler-Benz share will be exchanged for one
DaimlerChrysler share
-- Merger valued at $ 92 bn -- largest industrial merger ever
Two of the world's most profitable car manufacturers, Daimler-Benz AG
, and Chrysler Corporation , have agreed to combine their
businesses in a merger of equals.
The transaction will create a world-class automotive corporation ranked in
the world's top three in terms of revenues, market capitalization and
earnings. The new company, to be called DaimlerChrysler, and jointly led by
Juergen E. Schrempp and Robert J. Eaton as Co-Chairmen and Co-Chief Executive
Officers ("Vorstandsvorsitzende"), will be uniquely positioned to exploit
the growth opportunities of the global automotive market in terms of
geographical and product segment coverage. With Daimler-Benz's non-automotive
businesses, including aerospace, services and rail systems, diesel engines and
automotive electronics operations, DaimlerChrysler will be a world leader in
transportation.
The two companies combined had total 1997 revenues of approximately
$ 130 bn (DM 234 bn) and combined pre-tax profits of $ 6.9 bn (DM 12.5 bn).
The merger, valued at $ 92 bn, will create the premier global automotive
company with one of the strongest portfolios of world class brands in both
passenger cars and trucks, as well as strong positions in Daimler-Benz's
non-vehicle businesses.
In 1997, the companies had combined operating cash flow of $ 12.7 bn
(DM 22.8 bn) and combined R&D expenditure of $ 7.1 bn (DM 12.8 bn).
DaimlerChrysler will have 421,000 employees worldwide, and with its excellent
growth opportunities, expects to increase this number.
Changing the face of the industry
"The two companies are a perfect fit of two leaders in their respective
markets," said Juergen E. Schrempp, Chairman of the Management Board of
Daimler-Benz. "Both companies have dedicated and skilled workforces and
successful products, but in different markets and different parts of the
world. By combining and utilizing each other's strengths, we will have a
pre-eminent strategic position in the global marketplace for the benefit of
our customers. We will be able to exploit new markets, and we will improve
return and value for our shareholders. This is a historic merger that will
change the face of the automotive industry."
Chrysler Chairman Robert J. Eaton said, "Both companies have product
ranges with world class brands that complement each other perfectly. We will
continue to maintain the current brands and their distinct identities. What
is more important for success: Our companies share a common culture and
mission. We are both clearly focused on serving the customer by building
world class cars and trucks, we both have a reputation for innovation and
quality, and we are both committed to increasing value for our shareholders.
DaimlerChrysler has the most skilled and innovative workforce in the industry
and we are committed to making their future as bright as the new company's.
By realizing synergies and with our combined financial and strategic
strengths, we will be ideally positioned in tomorrow's marketplace."
Building the future on combined strengths
There will be immediate growth opportunities by using each other's
facilities, capacities and infrastructure. Product strategies will be
developed to enhance growth in mature markets as well as in Asia and other
emerging markets. In 1999, the first year of merged operations,
DaimlerChrysler expects to realize benefits of $ 1.4 bn (DM 2.5 bn) through
the exchange of components and technologies, combined purchasing power, and
shared distribution logistics. These synergies do not involve plant closures
or lay-offs, nor do they include ongoing cost reduction programs.
Further synergies are expected to be realized in the medium term by
sharing know-how in engineering and manufacturing. The management expects
annual benefits of $ 3 bn (more than DM 5 bn) within three to five years.
DaimlerChrysler will have a portfolio of strong brands covering most
product segments around the world which will be maintained and strengthened
through the combination of the businesses.
Strongest portfolio of world class brands
Chrysler Corporation produces cars, minivans, trucks and sports-utility
vehicles for customers worldwide. In North America, the company markets
vehicles through two divisions: Dodge and Chrysler/Plymouth/Jeep(R).
Chrysler invented the minivan, and has sold almost 7 million of them worldwide
since 1984. Jeep is the best known sports-utility marque in the world.
Financing for Chrysler's dealers and customers is provided through the
Chrysler Financial Corporation subsidiary. Chrysler reported its second best
year in history in 1997, with unit sales of 2,886,981 worldwide, sales
revenues of $ 61.1 bn (DM 110 bn) and an operating profit of $ 4.7 bn
(DM 8.5 bn).
With Mercedes-Benz and Smart Cars, Daimler-Benz is the market leader in
most of the world's premium car markets. In 1997, Daimler-Benz sold an
all-time high of 715,000 Mercedes-Benz cars and sports-utility vehicles and
achieved record sales revenues in this division of $ 30 bn (DM 54 bn) and an
operating profit of $ 1.7 bn (DM 3.1 bn). In its commercial vehicle division
(Mercedes-Benz, Freightliner, Setra, Sterling) Daimler-Benz also achieved a
sales record of 417,000 units worldwide, generating revenues of
$ 21.7 (DM 39 bn). Overall in 1997, Daimler-Benz reported an operating profit
of $ 2.4 bn (DM 4.3 bn) on revenues of $ 68.9 bn (DM 124 bn).
The creation of DaimlerChrysler will also allow the growth of
Daimler-Benz's non-automotive businesses which will continue to pursue their
respective strategies of expansion. Daimler-Benz Aerospace (Dasa), one of the
leading European aerospace companies and the German partner in Airbus,
contributed revenues of $ 8.5 bn (DM 15.3 bn) in 1997. Daimler-Benz
Interservices (debis), which includes financial services as well as IT and
telecommunication services, reported revenues of $ 8.6 bn (DM 15.5 bn) in
1997. With its rail systems business Adtranz, a 50 percent joint venture with
ABB, Daimler-Benz is the leader in the global rail transportation market.
Adtranz contributed revenues of $ 1.8 bn (DM 3.2 bn) in 1997. Automotive
Electronics (Temic) generated revenues of $ 1.4 bn (DM 2.6 bn), and the diesel
engines business is, with sales of $ 0.9 bn (DM 1.7 bn) in 1997, one of the
world's leading suppliers of high-grade propulsion systems for land, marine
and rail-bound vehicles.
Corporate governance reflects strengths from Europe and the US
DaimlerChrysler AG, incorporated in Germany, will have two operational
headquarters in Stuttgart, Germany, and Auburn Hills, Michigan, USA. The
senior management will have 18 members drawn from both companies and, for a
three-year period, will be co-headed by Robert J. Eaton and Juergen E.
Schrempp. There will be a Chairmen's integration council with 7 members who
will focus on realizing the combined strengths of DaimlerChrysler.
The merger will be accomplished through exchange offer and merger
transactions in which stockholders of both companies will become stockholders
of the new company. Daimler-Benz stockholders will hold one share of
DaimlerChrysler for each Daimler-Benz share they now own. Chrysler
stockholders will receive 0.547 of a DaimlerChrysler share for each Chrysler
share they now own. The final ratio will be adjusted to reflect the special
pay-out and capital increase transaction of Daimler-Benz scheduled for June
1998. The transaction is expected to be tax-free for both companies and their
shareholders, and is currently planned to be accounted for as a
pooling-of-interests.
Chrysler shareholders will hold approximately 43 percent of the new
company, and Daimler-Benz shareholders will hold approximately 57 percent.
DaimlerChrysler shares and ADSs will trade on all the same exchanges as do the
Daimler-Benz shares and ADSs, including the Frankfurt Stock Exchange and the
New York Stock Exchange. The transaction has been approved by the Chrysler
Board of Directors and the Daimler-Benz Board of Management. It is subject
to approval by the shareholders of both companies and the Daimler-Benz
supervisory board, as well as regulatory clearance, a tax ruling and opinions
and other customary conditions, and is expected to be closed by year-end.
Credit Suisse First Boston is advising Chrysler, and Daimler-Benz is being
advised by Goldman Sachs and Deutsche Bank.
Daimler-Benz has filed a registration statement with respect to its global
offering of rights to acquire Daimler-Benz shares and ADSs with the United
States Securities and Exchange Commission, but the registration statement has
not yet become effective. Neither the rights nor the Daimler-Benz shares or
ADSs which may be acquired upon exercise of the rights may be bought or sold
until the registration statement becomes effective.
Key figures DaimlerChrysler (pro forma) (A)
Daimler Chrysler Pro-forma DaimlerChrysler
Benz
- in Mil USD - 1997(B) 1997 1997(B) 1996(B) 1995(B)
Revenues 68.917 61.147 130.064 120.474 110.409
Operating Profit 2.404 4.723 7.127 7.615 (448)
Income (loss) before
financial income and
income taxes (EBIT) 2.017 5.563 7.581 7.913 (91)
Income (loss) before
financial income,
income taxes,
depreciation and
amortization 6.572 8.259 14.831 14.41 n.a.
(EBITDA)
Income (loss) before
income taxes (EBT) 2.361 4.557 6.918 6.991 (666)
Net Income 1.762(C) 2.805 4.567 5.063 (1,158)
Earnings per share 3.42(C) 4.15 -- -- --
Stockholders' equity 19.492 11.362 30.854 26.234 23.659
Total assets 76.166 60.418 136.584 118.662 110.477
Number of employees 300.168 121.000 421.068 413.029 430.993
A) Pro forma numbers reflect the arithmetic combinations of figures
previously reported in each company's annual report assuming a
business combination according to the pooling-of-interest method.
B) Exchange rate 1.80 DM/$
C) Excluding non-recurring income tax benefits of $2,706 Mil; including
such benefits net income was $4,468 Mil and 15.59 DM per share
CHRYSLER CORPORATION FACT SHEET
Chrysler Corporation is a multi-billion dollar U.S. based company involved
in the manufacturing and selling of cars, minivans, sport-utility vehicles and
trucks for customers worldwide. Its mission is to produce cars and trucks
that people will want to buy, will enjoy driving and will want to buy again.
FOUNDED: June 6, 1925, a Delaware corporation
WORLD HEADQUARTERS: Auburn Hills, Michigan, USA
ADDRESS: Chrysler Corporation
1000 Chrysler Drive
Auburn Hills, Michigan 48326-2766
TELEPHONE: 248-576-5741
WORLD WIDE WEB
ADDRESS: http://www.chryslercorp.com
EMPLOYMENT: 122,000 worldwide (1997)
CHIEF OFFICERS: Chairman & CEO: Robert J. Eaton
Vice Chairman: Robert A. Lutz
President: Thomas T. Stallkamp
Exec. Vice President and CFO: Gary C. Valade
MAJOR BRANDS: Chrysler/Plymouth, Jeep(R) and
Dodge/Dodge Truck vehicles
TOTAL SALES/REVENUES: $61.1 billion (1997)
VEHICLES SOLD: 2,864,329 cars, minivans, light trucks and
sport-utility vehicles sold (worldwide in 1997).
International Operations focuses on 30 key markets
around the world in which over 90 percent of
Chrysler's non-North American sales occur.
MANUFACTURING
FACILITIES: 15 assembly plants, 11 power train plants,
3 stamping operations, 8 component plants and 5
technical centers in North America; 10 manufacturing
affiliations outside of North America.
TEST FACILITIES: Chrysler Technology Center, Auburn Hills, Michigan
Chelsea Proving Grounds, Chelsea, Michigan
Arizona Proving Grounds, Wittmann, Arizona
MAJOR SUBSIDIARIES:
-- Chrysler Canada, Ltd. - Windsor, Ontario
-- Chrysler/Caterpillar Parts Distribution Center - European parts
distribution center in Puurs, Belgium
-- Chrysler de Mexico, S.A. - Mexico City, Mexico
-- Chrysler Financial Corporation - Fourth largest non-bank finance
company in the United States, provides financial and related Services
in Southfield, Michigan
-- Chrysler Europe* - Distributes Chrysler and Jeep vehicles throughout
Europe from the Brussels, Belgium Headquarters
-- Chrysler Asia Pacific* - Distributes Chrysler and Jeep vehicles
throughout Asia Pacific from the Singapore Headquarters
-- Chrysler Motor De Venezuela* - Headquarters in Caracas, Venezuela;
assembly plant in Valcencia, Venezuela
-- Chrysler Argentina* - Headquarters in Buenos Aires, Argentina; assembly
plant in Cordoba, Argentina
-- Chrysler do Brasil* - Headquarters in Sao Paulo, Brazil; assembly plant
in Curitiba, Brazil
JOINT VENTURES:
-- Arab American Vehicles Company - Assembles Jeep vehicles and
distributes Chrysler and Jeep vehicles in Cairo, Egypt
-- Beijing Jeep Corporation (Beijing Auto Works, P.R.C.) - Assembles Jeep
vehicles for Chinese market in Beijing, China
-- Eurostar (with Steyr-Daimler-Puch of Austria) - Assembles minivans in
Graz, Austria
-- New Venture Gear (with General Motors Corp) - manufactures
four-wheel-drive transfer cases, transmissions and gears in
Syracuse, New York and Muncie, Indiana
-- Thai Chrysler Automotive Ltd. - Assembles Jeep vehicles and distributes
Chrysler and Jeep vehicles for Thai market in Bangkok, Thailand
-- Valeo/Acustar Thermal Systems - Engineers heating and cooling
systems in Livonia, Michigan
AFFILIATIONS:
-- Bangchan General Assembly Company - Assembles Jeep vehicles in
Bangkok, Thailand
-- Djakarta Motor Company - Assembles Jeep vehicles in Jakarta,
Indonesia
-- First Automobile Works - Assembles engines in Changchun, China
-- MBF Automobile, S.d.m.B.h.d. - Assembles Jeep vehicles in Kuala Lumpur,
Malaysia
-- Steyr-Daimler-Puch Fahrzeugtechnik Ges.m.b.H. - Assembles Jeep Grand
Cherokees in Graz, Austria
* - Outside North American Operations see "Chrysler International
Operations Fact Sheet"
DAIMLER-BENZ AT A GLANCE
Daimler-Benz is Europe's largest industrial company and in 1997 generated
turnover of DM 124 billion and an Operating Profit of 4.3 billion.
23 business units, housed in the divisions Passenger Cars, Commercial
Vehicles, Aerospace, Services and the Directly Managed Businesses (Rail,
Automotive Electronics and Diesel Engines), employ almost 300,000 people
worldwide.
The prime mission of Daimler-Benz is to increase corporate value in the
interests of both employees and shareholders, to develop innovative products
for our customers and to continue the internationalization of the Group.
With both divisions Passenger Cars and Commercial Vehicles of the brands
Mercedes-Benz, Setra, Freightliner, Sterling (in North America) and in future
Smart, Daimler-Benz's focus is on the automotive sector. Quality and safety
of the oldest car manufacturer's products are rooted in a tradition of
automotive excellence which stretches back more than one hundred years. New
products like the small A-class and the Smart are now extending the
traditional vehicle line-up. On the commercial vehicle side too,
Mercedes-Benz has been at the forefront of technological advance for many
decades and is the largest bus and truck manufacturer in the world.
Daimler-Benz Aerospace (Dasa) houses the activities of the Daimler-Benz
Group in the fields of aircraft, defense and civil systems, space systems and
aeroengines. As Germany's largest aerospace company, Dasa is today an
important partner in European and international alliances and is systems
manager of complex technological projects. With a holding of 37.9 percent,
Dasa is the German partner in the European consortium Airbus Industrie.
Daimler-Benz InterServices, comprising the units Financial Services/
Insurance Brokerage, IT Services, Telecommunications and Media Services,
Trading and Real Estate Management, is the services company of the Group.
Temic is active in the field of automotive electronics and MTU
Friedrichshafen builds diesel engines for use in ships and a variety of other
applications, while Adtranz, a joint venture with ABB, is the world market
leader in the field of rail systems.
SOURCE Chrysler Corporation; Daimler-Benz AG
