Automotive News / December 4, 2006 - 1:00 am
More DaimlerChrysler shareholders in Europe are calling for a spinoff of the money-losing Chrysler group, which they say is dragging down the company, raising borrowing costs and damaging management credibility.
"I would welcome a separation of Daimler from Chrysler," said Ingo Speich, portfolio manager at German fund manager Union Investment, which owns 14 million shares and is among the company's biggest German investors.
He said Chrysler remains a "problem child" that could torpedo future results even if management makes no mistakes. The Chrysler group will lose more than $1 billion in 2006.
"I think a demerger is very realistic," said Juergen Meyer, fund manager at Sweden's SEB Asset Management, which owns 1.2 million DaimlerChrysler shares. "I don't see the synergies that DaimlerChrysler has been pursuing for years."
And JPMorgan said in a report: "We remain convinced that management patience toward underperforming assets like Chrysler has worn thin and increases the likelihood that DaimlerChrysler will reduce exposure to Chrysler."
Dumping Chrysler would cut DaimlerChrysler's borrowing costs, said Falk Frey of Moody's, which cut DCX's rating in September after Chrysler predicted losses.
He said: "We would certainly have to consider a different rating for DaimlerChrysler if Chrysler were no longer in the group."
