1. A Merger of Equal
A Marriage Made In Heaven
An Incompatible
The Perfect Union
Deal of The Century

2. TheGermanAggression…

3. BACKGROUND
 Daimler-Benz AG founded in
1926 by Gottlieb Daimler and
Carl Benz.
 Business Divisions: Mercedes-
Benz Cars, Daimler Trucks,
Daimler Financial Services,
Daimler Buses, Mercedes-Benz
Vans
 Today is the 2nd
of the Big Three
European Automakers
(Volkswagen, Daimler AG,
Renault

4. BACKGROUND
All American

5. Background of
Chrysler
 Founded by Walter P. Chrysler on June 6,
1925.
 Business Divisions: Chrysler, Dodge, ENVI,
Jeep, Global Electric Motorcars (GEMCAR),
Mopar, Chrysler Financial.
 In 1928, Acquisition of the Dodge Brothers
firm made Chrysler the third of Detroit’s “Big
Three” (GM, Ford, Chrysler) automakers
overnight.

6. The Merger
How it all happened…

7. Motives forthe Merger
 To leverage on each other’s strengths.
 To exploit new markets (US for Daimler and Europe for Chrysler).
 Improving shareholder’s return.
 Reducing the overall effective global competition.
 Daimler's view to increase its market capitalization, revenues and
earnings.
 Purchasing, distribution, Research & Development.

8. Following the alliance…

9. 1998
 On May 7th, 1998, Bob Eaton announced that Chrysler
would merge with Daimler-Benz through a $37 billion stock-
swap deal, the largest trans-Atlantic merger ever.
 Daimler-Benz CEO Jürgen Schrempp hailed the union as "a
merger of equals.”
 When he rang the bell at the New York Stock Exchange to
inaugurate trading of the new stock, DCX, Eaton predicted,
"Within five years, we'll be among the Big Three automotive
companies in the world

10. 1999
 "The first full year of DaimlerChrysler had
been a great one.
 Their sales revenues for 1999 are up about 12
%. They sold 3 .2 million Chrysler, Dodge,
Plymouth, and Jeep products - more than any
other year history.
 They also sold more than a million Mercedes-
Benz passenger cars, and 550,000
commercial vehicles - also a record."

12. Situation after2 years..
 DaimlerChrysler's US arm stumble.
 Revenue decrease of 6% from 2000.
 Jurgen Schrempp was replaced by Dieter Zetsche
of Chrysler leading to mismanagement.
 Chrysler division suffered a large financial loss of
1.5 billion Euros and had plans to lay off over
13,000 jobs and closure of six plants.

13. REASONS FORFAILURE
“How do you pronounce
the name of a German-
American automaker?”
Daimler.
Chrysler is silent.
--DC headquarters joke
Auburn Hills, MI

14. 1. Cultural Clash
 DaimlerChrysler did provide cultural
workshops for employees and had post-
merger integration team.
 During the deal making process, meeting of
the minds was met at senior management
level.
 However, there are several components
causing this clash.

15. Contd..
 Corporate structure
 Corporate governance and lifestyle
 Purchasing distribution and sales
 Values
 Customer proposition

16. ““Mercedes was universally perceived as theMercedes was universally perceived as the
fancy, special brand, while Chrysler, Dodge,fancy, special brand, while Chrysler, Dodge,
Plymouth and Jeep were the poorer, bluePlymouth and Jeep were the poorer, blue
collar relations”collar relations”
James Holden, President of
Chrysler
--From September 1999
to November 2000

17. 2. Mismanagement
 Failure to inform all stakeholders accurately
about the terms of the mergers.
 Oct 2000, Schrempp, Daimler CEO,
confessed that it was never meant to be
merger of equal – Chrysler was to be a
subsidiary of Daimler-Benz.
 This caused “Deep Mutual Distrust”.

18. 3.Communication
challenges
 No clear message and communication about answer
to current problems and who is going to run the entity.
The German? Will facilities of Chrysler have to close
down?
 DaimlerChrysler’s communication strategy was not
effective enough to meet this challenge.
 Less than 2 years, it had lost the confidence of the
media and credibility it had with US management staff
and shareholders.
 Soon DaimlerChrysler was referred to as acquisition
rather than merger.

19. CURRENT SITUATION

20. The Divorce
 May 2007, a private equity firm Cerberus Capital
Management LP is buying 80.1 percent of Chrysler, for $7.4
billion.
 Far from the $38 billion Daimler spent to acquire Chrysler
back in 1998.
 Not all money goes to DaimlerChrysler, the money actually
goes to paying off Chrysler's outstanding loans, ensuring the
new Chrysler Holding company begins life debt-free.
 Today Daimler AG is the 2nd
of the Big Three European
Automakers (Volkswagen, Daimler AG, Renault)

21. Just A Plain Daimler
-- Backto DaimlerAG

22. THANK YOU
 MRIDULA DAS
 DHRUV KRISHNARAJ
 ISHITA JAIN
 NAVYA LUTHRA
 KSHITIJ DALMIA
 PRATIK LADDHA
 SHREYA BAKLIWAL