Bear Sterns pulls out of Chrysler bid

Kirk Kerkorian's mega-bid for the Chrysler Corporation appeared to stall yesterday following the revelation that the investment bankers Bear Stearns have walked away as his Wall Street advisers in the attempt.

Bear Stearns took the surprise decision after receiving a letter from Chrysler pressuring the bank not to assist in Mr Kerkorian's $22bn bid. The car maker has meanwhile embarked on a parallel campaign to dissuade the commercial banks from helping raise finance for the proposed takeover.

Though Bear Stearns had not formally been engaged by Tracinda, Mr Kerkorian's Las Vegas-based investment company, the bank had stated publicly that it had been selected to help shepherd the hostile bid. Its withdrawal leaves Tracinda without any Wall Street adviser.

"No one else as far as we know has stepped up to the plate," Joseph Philippi, a car industry analyst at Lehman Brothers, said. He also noted that Chrysler shares have been slipping in recent days as the credibility of Mr Kerkorian's $55-a-share offer has appeared to erode.

Other investment banks that have a track record with Mr Kerkorian include Merrill Lynch and Salomon Brothers. Analysts thought it unlikely that Merrill would want to get involved while Salomon is already helping Chrysler plot its defence.

Mr Kerkorian, who has teamed up for the bid with Lee Iacocca, the former Chrysler chairman, may face more serious difficulties, meanwhile, in raising financing, particularly with Chrysler arm-twisting the banks. His proposed takeover would require up to $12bn in new loans, together with $3bn from outside investors. The rest would come from Chrysler's own cash and from Mr Kerkorian and Mr Iacocca themselves.

Many big banks have relationships with Chrysler they would be loath to jeopardise by helping Mr Kerkorian. They include Chemical Bank, Chrysler's lead bank, JP Morgan and Chase Manhattan. One bank that conspicuously does not have ties with Chrysler is Citicorp.

And while Tracinda will now have to search for a new investment bank, Chrysler has lined up three of Wall Street's main players: Salomon, Morgan Stanley and, principally, CS First Boston.

Start your day with The Independent, sign up for daily news emails
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Digital Optimisation Executive - Marketing

£30000 - £35000 per annum: Recruitment Genius: The UK's fastest growing, multi...

Recruitment Genius: Financial Reporting Manager

£70000 - £90000 per annum: Recruitment Genius: A Financial Reporting Manager i...

Recruitment Genius: Payments Operations Assistant

£23000 - £25000 per annum: Recruitment Genius: They win lots of awards for the...

Recruitment Genius: Telephone Debt Negotiator

£13500 - £20000 per annum: Recruitment Genius: This nationwide enforcement com...

Day In a Page

Sepp Blatter resignation: The beginning of Fifa's long road to reform?

Does Blatter's departure mean Fifa will automatically clean up its act?

Don't bet on it, says Tom Peck
Charles Kennedy: The baby of the House who grew into a Lib Dem giant

The baby of the House who grew into a Lib Dem giant

Charles Kennedy was consistently a man of the centre-left, dedicated to social justice, but was also a champion of liberty and an opponent of the nanny-state, says Baroness Williams
Syria civil war: The harrowing testament of a five-year-old victim of this endless conflict

The harrowing testament of a five-year-old victim of Syria's endless civil war

Sahar Qanbar lost her mother and brother as civilians and government soldiers fought side by side after being surrounded by brutal Islamist fighters. Robert Fisk visited her
The future of songwriting: How streaming is changing everything we know about making music

The future of songwriting

How streaming is changing everything we know about making music
William Shemin and Henry Johnson: Jewish and black soldiers receive World War I Medal of Honor amid claims of discrimination

Recognition at long last

Jewish and black soldiers who fought in WWI finally receive medals after claims of discrimination
Beating obesity: The new pacemaker which helps over-eaters

Beating obesity

The new pacemaker which helps over-eaters
9 best women's festival waterproofs

Ready for rain: 9 best women's festival waterproofs

These are the macs to keep your denim dry and your hair frizz-free(ish)
Cycling World Hour Record: Nervous Sir Bradley Wiggins ready for pain as he prepares to go distance

Wiggins worried

Nervous Sir Bradley ready for pain as he prepares to attempt cycling's World Hour Record
Liverpool close in on Milner signing

Liverpool close in on Milner signing

Reds baulk at Christian Benteke £32.5m release clause
On your feet! Spending at least two hours a day standing reduces the risk of heart attacks, cancer and diabetes, according to new research

On your feet!

Spending half the day standing 'reduces risk of heart attacks and cancer'
With scores of surgeries closing, what hope is there for the David Cameron's promise of 5,000 more GPs and a 24/7 NHS?

The big NHS question

Why are there so few new GPs when so many want to study medicine?
Big knickers are back: Thongs ain't what they used to be

Thongs ain't what they used to be

Big knickers are back
Thurston Moore interview

Thurston Moore interview

On living in London, Sonic Youth and musical memoirs
In full bloom

In full bloom

Floral print womenswear
From leading man to Elephant Man, Bradley Cooper is terrific

From leading man to Elephant Man

Bradley Cooper is terrific