In the frantic last weeks before Chrysler LLC was forced Thursday by the U.S. government to file for bankruptcy protection, it sought suitors from around the world.
The Chinese weren’t interested. Neither was Toyota Motor Corp. Nor were most other major automakers the Auburn Hills automaker approached over the last two years to see if anyone was interested in buying pieces of the company.
“Chrysler has attempted in recent weeks to sell product lines and other units to a number of Chinese companies, but these efforts too have been unsuccessful,” Chrysler Co-president and Vice Chairman Tom LaSorda said in an affidavit filed in U.S. Bankruptcy Court in New York.
Chrysler hosted potential Chinese buyers at its Auburn Hills headquarters in February for five days, offering to sell engines, transmissions, vehicle lines and Chrysler’s Newark paint shop.
“Chrysler sent letters to parties, primarily in China, whom we thought would be potentially interested in purchasing our assets,” LaSorda wrote. “Over the next two months, several companies, including Beijing Automotive Industry Holding Co., Tempo International Group, Hawtai Automobiles, and Chery Automotive Co., expressed interest in purchasing specific vehicles, powertrains, intellectual property rights, distribution channels and automotive brands.”
But none of those deals was completed because of the struggling economy.
A partnership with Fiat SpA could lead to the Italian automaker controlling Chrysler outright and was the best outcome, LaSorda said.
The filings show Chrysler’s extensive efforts to find a partner. Chrysler CEO Robert Nardelli called then General Motors Corp. Chairman and CEO Rick Wagoner in January in a vain attempt to resurrect merger talks.
Fiat, it turns out, was the best option, LaSorda said.
“It is Chrysler’s last best hope. I know because I have spent over two years looking for, talking to and evaluating potential partners,” LaSorda said. Chrysler’s efforts to form alliances with Nissan, GM, Volkswagen, Tata Motors, Magna, GAZ, Hyundai, Honda and Toyota “have been determined and undertaken in good faith, but have met uniformly without success.”
Chrysler approached Toyota in June when LaSorda “submitted a formal request to discuss potential joint opportunities.” Toyota rejected the request in July.
Honda Motor Co. rejected a proposal in December — one day after it was made.
LaSorda’s filing disclosed that Chrysler got much further with Nissan than had been previously known.
Chrysler began talks in spring 2007, even before Chrysler was sold to Cerberus Capital Management LP.
In early 2008, Chrysler spent three months in talks with Nissan about a wide-ranging alliance and exchanged term sheets in July, but the deal fell apart “due to the inability of Nissan’s finance company to provide the needed support.”
In February 2008, Chrysler and Nissan “assembled teams of executives, engineers, technicians and other personnel to analyze the synergies that would result from a merger across different areas,” LaSorda wrote.
“In May, the teams reported that an alliance between Chrysler and Nissan could generate operational synergies on a gross cash basis of more than $11.8 billion in cash flow for Chrysler only,” LaSorda said, and $18 billion for both companies.
Nissan and Chrysler executives held more than a half-dozen face-to-face meetings in Auburn Hills, Paris, New York and Tokyo.
After the talks failed in July, the companies returned to the bargaining table in September.
Key executives of both companies, including Nissan’s Carlos Tavares and top executives from Cerberus, met in Paris “for a full day of face-to-face negotiation, particularly centered on the financing arm,” LaSorda wrote.
“Negotiations in Paris were extensive, but no deal could be achieved.”
In January, LaSorda again contacted Tavares to see if Nissan was interested in a tie-up — but Nissan said it wasn’t.
Chrysler disclosed its talks with General Motors Corp. began in June 2008, when LaSorda called John Smith, GM’s senior vice president for product planning and development. By August, GM and Chrysler had held significant talks.
The talks were called off in November.
Chrysler and Fiat began talks in March 2008, initially focused on producing and selling the Fiat 500 in the United States.
Beginning in the summer of 2008, Fiat and Chrysler were analyzing potential cost savings in a Fiat-Chrysler partnership.
In November, they said they would save $3.7 billion over eight years. Nardelli wrote to Fiat on Dec. 23 asking Fiat to start talks toward reaching a formal alliance and Fiat CEO Sergio Marchionne wrote back Dec. 30 with a detailed proposal.
The companies signed an agreement Thursday.