In today’s video we are focusing on the DaimlerChrysler merger, specifically looking at some of the best products that came from Chrysler and Mercedes, typically using their synergy and combining resources to make products! The merger may have been a failure in the end, but even failed marriages can produce beautiful offspring. So, let’s look at some of the combined efforts of the two companies.
The Merger - Extra Information
In the mid-1990s, Chrysler was close to bankruptcy. Chrysler’s advisers saw a need for the company to merge with another automobile maker in order to survive in the competitive car industry. Automobile analysts at the time were expecting that only 10 out of the 30 car makers could survive in the global market. Chrysler brought some benefits to the table – they had high profitability that was achieved by low research and development expenses and a well-aged product portfolio with many popular and well-established models. Daimler-Benz had the cash to keep Chrysler alive, wanted to reduce their R&D costs, and liked the prospective synergies and market capitalization. Projected sales were 4 million cars in 1999, with expected cost savings $1.4B immediately in the first year, and $3.5B per year within 2 to 3 years.
The shares exchanged were valued at $38B US, the world’s largest cross-border deal at the time. The merger was dubbed “a merger of equals”, creating a company with more than 440,000 employees, a market capitalization of $92 billion and annual revenues of about $130 billion. There were issues of contention, like whether the merger actually delivered synergies and successfully integrated the two businesses, and whether this was actually a merger of equals and not just a takeover for Daimler-Benz to take advantage of Chrysler.
In the end, things just didn’t work out. The German and American corporate styles and attitudes were constantly clashing, and in the end Daimler was more controlling with Chrysler forced to do as they were told. Things went belly up in 2007, with Daimler selling 80.1% of Chrysler Group to American private equity firm Cerberus Capital Management on May 14, 2007.
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