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Mergers, Acquisitions and Takeovers Case Study

Case Title:

General Motor’s Plan to Buy Chrysler: Prospects and Perils

Publication Year : 2010

Authors: K Ray, S Chhaochharia

Industry: Automobiles


Case Code: MAA0183IRC

Teaching Note: Not Available

Structured Assignment:  Not Available

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On 16 February 2007, General Motors (GM), then the world's largest car manufacturer expressed its intention to buy Chrysler from its German parent DaimlerChrysler. Both the companies were very interested in exploring a deal, and both had discussed the prospect internally. The Daimler management was open to an easy way out of Chrysler's problems, and GM was perceiving plenty of advantages in snapping up its 80-year-old rival. It was estimated that buying Chrysler would add sales of 2.65 million cars a year to GM's 9 million, keeping it way ahead of Toyota in the race to remain the world's number one automaker. Analysts also calculated that both the companies could merge their operations so that the combined company would add Chrysler's $62 billion in revenue, plus such plums as the Jeep brand, the Chrysler 300, and the minivan franchise. However, some analysts were sceptical about the prospective perils of the deal. Chrysler, the smallest of the traditional 'Big Three' carmakers had plenty of problems, including the loss of $1.4 billion in 2006 and had announced retrenchment of 13,000 employees in the same year. Analysts believed the deal would be very costly for GM. What then, did GM see in a troubled company such as Chrysler?

Pedagogical Objectives:

Keywords : General Motors Corporation, Chrysler Corporation, DaimlerChrysler AG, United Auto Workers, Auto industry, Nissan Motor Co, Renault SA, Hyundai, Shanghai Automotive Co, Chery Automobile Co, 'Big Three' car makers in the US, Chevrolet, GM Daewoo Auto & Technology Company, Suzuki Motor Corporation, BMW AG

Contents : 
General Motors Corporation
The Chrysler Corporation
DaimlerChrysler AG
Prospective Synergie

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