Taken for a Ride: How Daimler-Benz Drove Off with Chrysler

Taken for a Ride: How Daimler-Benz Drove Off with Chrysler

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by Bill Vlasic, Bradley A. Stertz

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The 1998 merger between Chrysler, America's blue-collar, comeback kid, and Daimler, the maker of the tony Mercedes-Benz seemed like a marriage made in heaven, but it hasn't turned out that way. The Wall Street Journal called it, "the biggest industrial merger of all time." News of the deal (a $38 billion stock swap that created a global company with $130

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The 1998 merger between Chrysler, America's blue-collar, comeback kid, and Daimler, the maker of the tony Mercedes-Benz seemed like a marriage made in heaven, but it hasn't turned out that way. The Wall Street Journal called it, "the biggest industrial merger of all time." News of the deal (a $38 billion stock swap that created a global company with $130 billion in annual revenue) was shocking because the products these two companies manufacture have such strong emotional significance for customers at home and abroad. But the story that unfolds falls short of the anticipated bliss.

Bill Vlasic and Bradley A. Stertz, of The Detroit News, interviewed all the major players, including Chrysler chairman Bob Eaton and Daimler chairman Juergen Schrempp, to create a day-by-day, inside-the-board-room account of the merger process, and the tumultuous year and a half that have followed this forcing together of different cultures and different ways of doing business.

Taken for a Ride is a gripping narrative with fantastic, real-life characters, including the bombastic Lee Iaccoca and the reculsive billionaire Kirk Kerkorian. It is also a cautionary tale about the dangers involved in the growing trend toward global consolidation in all industries.

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Editorial Reviews

Mark Yost
In Taken for a Ride, authors Bill Vlasic and Bradley A. Stertz vividly tells the story of the merger between Daimler-Benz and Chrysler in May 1998. They paint a convincing portrait of Chrysler's insular chief executive, Bob Eaton, finding himself outmaneuvered by a ruthless industrial baron, Juergen Schrempp. Mr. Schrempp was the head of Daimler-Benz before the merger and is now clearly in charge of DaimlerChrysler.

The authors have done their homework, having followed this story at close range as it unfolded and then taken time off from their newspaper jobs to conduct follow-up interviews, filling in the gaps and filling out the details. Indeed, their account is so thorough that one finds oneself, at times, wishing for less rather than more. But a fascinating tale it is.
Wall Street Journal

Keith Bradsher
A spellbinding tale, juicy gossip and all, of how business is really done among the world's largest companies . . . Full of fresh facts and insights . . . As fun to read as it is informative about how one of the world's largest companies was formed.
The New York Times Book Review
Kirkus Reviews
A carefully documented yet spirited account of a corporate marriage seemingly made in hell. Nothing in the corporate cultures of Germany's Daimler-Benz and America's Chrysler suggested that the two would make a good match, according to Detroit News journalists Vlasic and Bradley: "Daimler and Chrysler didn't develop, manufacture, market, or sell cars the same way. Daimler executives had larger staffs and fatter expense accounts. Chrysler officers had broader responsibilities and bigger salaries and bonuses." Vlasic and Stertz also note that Daimler was worth much more than Chrysler, by nearly every measure, and that Daimler's staff spoke fluent English and was perfectly at home in the global market, whereas the Detroit-based firm was resolutely insular and proud of its blue-collar, made-in-America ethos. Even so, in the mid-1990s, when billionaire investor Kirk Kerkorian began to maneuver against self-promoting Chrysler chairman Lee Iacocca for control of the company—initiating, for instance, steps to buy up stock and return Chrysler to its former privately held status—he found curious allies in the German and Swiss executives who controlled Daimler-Benz (and who sought to broaden their American—and then the Asian—market). In 1998, after long, cloak-and-dagger negotiations that the authors recount in vivid detail, the parties engineered what has been called "the biggest industrial merger of all time," involving a swap of stock valued at $38 billion and a restructuring of the corporate giants on both sides of the Atlantic. The merger had unforeseen consequences large and small; the authors note, for instance, that Kerkorian, who had ordered a new Boeing jet for hisownuse, had to switch to an Airbus, for with the union of Chrysler and Daimler he had become the largest single private investor in the Airbus consortium. More to the point, after the Germans "took control over an American icon," they found themselves heading an unwieldy entity that may in the end do damage both to the Mercedes and the Chrysler brands (and one that, in any event, "did not make any money for shareholders on either side of the Atlantic Ocean"). Sometimes breathlessly narrated but always interesting, this is a solid work of popular business reporting.

From the Publisher
"Vlasic and Stertz a riveting tale about gentlemen at play in the decidedly ungentlemanly game of high-stakes, international boardroom piracy. A supercharged, 200-mph read all the way." - Brock Yates, Outlaw Machine
"This is a clear-eyed expose of how the car business works-with a narrative that speeds you through the intrigue with all the velocity of a Dodge Viper. It plunks you right on the filing cabinets as the motor titans clash."- Robert Lacey,
"Taken for a Ride is without a doubt entertaining, readable and strong journalism." - Financial Times

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HarperCollins Publishers
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Chapter One

The two men faced off in a dreary hotel room at the Detroit Metropolitan Airport, emissaries from different worlds at a dangerous intersection on the morning of April 10, 1995.

Alex Yemenidjian laid a black-covered document titled "Project Beta" on the table. Darkly handsome with olive skin and slicked-back black hair, Yemenidjian was the protege of Kirk Kerkorian, one of the world's richest men and the owner of thirty-six million shares of stock in Chrysler Corporation. Born in Argentina, raised in Los Angeles, and fiercely proud of his Armenian heritage, Yemenidjian seemed coiled, tightly wound, a little nervous.

"It is our understanding you are familiar with the model,'' Yemenidjian began stiffly, his accent an exotic mix of Spanish and Armenian dialect.

Tom Denomme sized up the smooth-talking casino executive in the Hugo Boss suit across from him. He had to be very careful.

"Yeah, we're familiar with it," Denomme replied. "What is the specific message you would like us to carry to Bob Eaton?"

"Time is of the essence," Yemenidjian said.

Denomme stared him in the eye.

"Where is the money coming from?" he asked.

"Don't worry about that," Yemenidjian said coolly. "Just tell Bob Eaton that we are going to do it."

Denomme, the fifty-four-year-old vice chairman of Chrysler, was nicknamed "The Priest" for his serious, circumspect demeanor and measured counsel. Tall, with chiseled features, his thinning brown hair meticulously parted and graying at the temples, Denomme could have played the strong, silent Gary Cooper role of sheriff in an old Hollywood western. He wasn't about to reveal anythingto this slick stranger from Las Vegas. A few weeks earlier Denomme had met in this same hotel with Gary Wilson, the high-flying financier who engineered the takeover of Northwest Airlines, Wilson had already laid out Project Beta for Denomme. Things were moving fast. It wasn't a matter of weeks anymore. The clock was ticking down.

If Kirk Kerkorian had the money to buy Chrysler, the seventh-biggest corporation in America, Denomme couldn't stop him. But Denomme could not fathom how it had come to this. If Kerkorian thought Chrysler's management would join him in a leveraged buyout, he was sorely mistaken. Instead, Chrysler stood ready to fight him.

Denomme and Gary Valade, Chrysler's chief financial officer, left the airport and drove to company headquarters in Highland Park, Michigan, a decaying industrial enclave on the edge of Detroit. They took the elevator to the fifth floor of the K. T. Keller Building, and Denomme called his boss. Chrysler Chairman Robert Eaton took the call in New York, where he was meeting with Wall Street investors before the 1995 New York Auto Show.

"Bob, we can't be a party to any of this," Denomme said. "We've just been through this whole cultural thing, convincing everybody that this is such a different company. For us to jump on the side of a buyout would be just traumatic."

Eaton didn't say much. He never did, He agreed with Denomme and hung up.

Yemenidjian and his aide, Dan Taylor, flew back to Las Vegas and sped to a small, sun-splashed, two-story office building a mile from the Strip. They went straight to Kerkorian. A tennis fanatic and onetime amateur boxer, Kerkorian looked much younger than his seventy-seven years. A shade under six feet tall, he had a wiry physique, deep tan, and full head of graying black hair swept back in a pompadour. His features seemed oversize: large ears; bushy, arching eyebrows; a wide toothy smile. Kerkorian was worth about $3 billion, but he was courtly, deferential, almost shy. Everyone he encountered received the same soft-spoken greeting. "Please," he would say, "call me Kirk."

"So," Kerkorian said, "how'd it go?"

The deal was on track, Yemenidjian said. For six months feelers had been put out to Chrysler executives about an enormous deal to take one of the world's biggest companies private, to buy all its stock and own it. Kerkorian was convinced it could be done. Chrysler stock was so cheap, $40 a share, and the company was a money machine, throwing off $1 billion in excess cash every quarter. This was the third face-to-face meeting between the two sides. Denomme seemed "very intrigued," Yemenidjian said. He never raised any objections and asked a lot of questions. Everything looked set. All that was left was for Kerkorian to call Bob Eaton and give him the word.

Kerkorian had chafed for months about Chrysler's feeble stock price. He had prodded Eaton several times to raise the dividend and repurchase stock, and Eaton had complied once before, in December 1994. But now Kerkorian wanted more. In his opinion, taking Chrysler private was too sweet a deal for Eaton or any other Chrysler executive to turn down.

Lee Iacocca, the retired chairman of Chrysler, lit a cigar in the next room. Iacocca savored the moment, which he had planned with Kerkorian for months. Iacocca believed the opportunity was ripe. Taking Chrysler private was the deal of a lifetime, one that would make him richer and restore his influence over his old company. They were so close to making it happen. A few more days, and Iacocca would be back in action again.

The next day Bob Eaton left an investor conference in midtown Manhattan late in the afternoon with Mike Morrison, his speechwriter, and Sam Messina, Chrysler's Wall Street liaison. The trio piled into a chauffeured car for the drive to Chrysler's company-owned apartment in the ritzy Waldorf Towers. The driver handed Eaton a note. Suddenly, the Chrysler CEO's head jerked and snapped around. Just like that kid in The Exorcist, Morrison thought. Eaton, looking pale, handed him the note: "Call Kerkorian. Immediately." The chairman sat in stony silence as the car inched through rush-hour traffic. When they arrived at the Waldorf, Eaton and...

Taken for a Ride. Copyright © by Bill Vlasic. Reprinted by permission of HarperCollins Publishers, Inc. All rights reserved. Available now wherever books are sold.

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Taken for a Ride: How Daimler-Benz Drove Off with Chrysler 4.3 out of 5 based on 0 ratings. 7 reviews.
Anonymous More than 1 year ago
Anonymous More than 1 year ago
If you are into the automotive industry like myself, or maybe just economics in general, this is the perfect book for you! This novel goes into great detail on the DaimlerChrysler merge of 1998, and everything that went wrong up to the year 2000. The only reason this novel does not get 5 stars is because it is a bit outdated. It does not go into the breakup or DaimlerChrysler in 2007. But overall, a great read, especially for those buisness savy people
Customer_Since1998 More than 1 year ago
This book reveals why and how the German luxury car company (Daimler-Benz) wanted to initiate "friend buy out" of an America's Industrial icon (Chrysler), under the deceptive announcement of "merger of equals".

The readers will learn the major events between the two "conflicting" sides and meet the key players from Auburn Hills to Frankfurt, along with interesting figures, such as Kirk Kerkorian and his associates to decide the future of the Pentastar Company.
Guest More than 1 year ago
Once I started reading this book, I couldn't put it down. The real-life story reads like something straight out of fiction. I'm not even really interested in the automotive industry. I would recommend this book to anyone interested in business and big corporations.
Guest More than 1 year ago
A birdeye view into the world of automobiles as seen by a select few on the top...interesting behind the scenes view of of historical event that continues to impact the industry
Guest More than 1 year ago
This book reads almost like a novel about business, in the tradition of 'Liar's Poker'. It is a funny book, too. But you also learn a lot about cross-cultural business, the car industry, and business psychology. Put enough big egos into one room, and you are bound to get enough material for a couple books. I enjoyed this book enormously.
Guest More than 1 year ago
Loved it! Read it in two nights .. could not put it down. Good mix of fact and entertainingly written. Has anyone heard how Kerkorian, Eaton, York, Lutz and Jurgen have reacted to it ?