DaimlerChrysler AG (NYSE:DCX) shareholders urged the company to sell its unprofitable Chrysler unit and focus on its Mercedes Car Group and other operations at the company's annual meeting yesterday. The company had already said that it was considering all strategic options for Chrysler in February, after the unit posted a $1.5 billion loss in 2006. Since then, the DC said they would cut 13,000 jobs and reduce capacity by 400,000 units as part of a "recovery and transformation plan" to bring the unit back to profitability by 2008. However, this plan drew criticism from shareholders who said the feasibility of a sustainable business model for Chrysler remains unclear.
DaimlerChrysler CEO Dieter Zetsche did confirm Wednesday, however, that the company was in talks with "potential partners" over the future of its business. While he did not go into specifics, he did note that these potential partners showed a claer interest in the company. Private equity firms Cerberus, Blackstone, and Centerbridge are also rumored to be interested in acquiring a stake in Chrysler as the first round of bids was expected to be submitted last week. However, labor representatives on both sides of the ocean will likely oppose such a deal due to fears over further job cuts and the loss of employee benefits. If a sale does take place, many analysts peg the value of Chrysler at $5 billion to $9 billion, depending on the terms of the deal. Combined, these factors make DCX a stock worth watching!
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