Taken for a Ride: How Daimler-Benz Drove Off with Chrysler / Edition 1 available in Hardcover
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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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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.