Wall St warms to Chrysler buyout

Support for Kirk Kerkorian's audacious $22.8bn (£14.2bn) buyout of Chrysler is gaining ground on Wall Street, where analysts are revising their initial scepticism.

While Mr Kerkorian has still not outlined how America's second-biggest takeover would be financed, there is growing belief he would have little trouble raising the cash. Kenneth Blaschke, analyst at Dean Witter, said: "Our belief at this point is that the market doesn't fully recognise the likelihood that this transaction could occur. We believe the deal is do- able."

Mr Kerkorian's announcement that he was interested in a buyout met with a cool response on Wall Street. European motor manufacturers did not help sentiment when all the big players dismissed suggestions that one of them could join the bid in order to get a viable US manufacturing base.

But speculation persists that Lee Iacocca, the former Chrysler chairman who is a consultant to Mr Kerkorian, is negotiating with Volkswagen AG, Europe's largest car maker, about forming a company with a working title of Global Motors. When at Chrysler in 1990, Mr Iacocca held merger talks with Fiat.

On Sunday a spokesman for Mr Kerkorian said there was "a lot of interest" in the deal from potential finance houses and from "foreign entities" interested in a strategic alliance with Chrysler.

One of Chrysler's largest shareholders, an investment fund run by the New Yorker Seth Glickenhaus, said at the weekend that he would be a "grudging seller" at the buyout offer price of $55 a share.

The Chrysler share price, which opened on Wall Street at $48, is likely to languish below the offer price until Mr Kerkorian unveils a more detailed financial plan.

Some analysts have suggested Mr Kerkorian is simply seeking a higher exit price for his own 10 per cent stake in Chrysler. But few now doubt he could raise the funds if serious about a buyout.

Mr Kerkorian has proposed financing the buyout by using $5.5bn of Chrysler's own cash reserves, $3bn in new equity and up to $12bn in new debt. He also plans to contribute his own Chrysler stock, worth about $2bn.

Meanwhile, Chrysler has appointed Timothy Adams as president of Chrysler Europe. He replaces Darrell Davis, president of Chrysler Financial, and will be based at the European headquarters in Frankfurt.

Start your day with The Independent, sign up for daily news emails
Sport
wimbledonScot will face Ivo Karlovic next
Sport
football
News
Hillary Clinton comments on viral Humans of New York photo of gay teenager
Arts and Entertainment
The gang rape scene in the Royal Opera’s production of Gioachino Rossini’s Guillaume Tell has caused huge controversy
music
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Assistant / Buyer

£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...

Recruitment Genius: Customer Service Advisor

£15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

Recruitment Genius: Compliance Manager

£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

Day In a Page

Is this the future of flying: battery-powered planes made of plastic, and without flight decks?

Is this the future of flying?

Battery-powered planes made of plastic, and without flight decks
Isis are barbarians – but the Caliphate is a dream at the heart of all Muslim traditions

Isis are barbarians

but the Caliphate is an ancient Muslim ideal
The Brink's-Mat curse strikes again: three tons of stolen gold that brought only grief

Curse of Brink's Mat strikes again

Death of John 'Goldfinger' Palmer the latest killing related to 1983 heist
Greece debt crisis: 'The ministers talk to us about miracles' – why Greeks are cynical ahead of the bailout referendum

'The ministers talk to us about miracles'

Why Greeks are cynical ahead of the bailout referendum
Call of the wild: How science is learning to decode the way animals communicate

Call of the wild

How science is learning to decode the way animals communicate
Greece debt crisis: What happened to democracy when it’s a case of 'Vote Yes or else'?

'The economic collapse has happened. What is at risk now is democracy...'

If it doesn’t work in Europe, how is it supposed to work in India or the Middle East, asks Robert Fisk
The science of swearing: What lies behind the use of four-letter words?

The science of swearing

What lies behind the use of four-letter words?
The Real Stories of Migrant Britain: Clive fled from Zimbabwe - now it won't have him back

The Real Stories of Migrant Britain

Clive fled from Zimbabwe - now it won’t have him back
Africa on the menu: Three foodie friends want to popularise dishes from the continent

Africa on the menu

Three foodie friends want to popularise dishes from the hot new continent
Donna Karan is stepping down after 30 years - so who will fill the DKNY creator's boots?

Who will fill Donna Karan's boots?

The designer is stepping down as Chief Designer of DKNY after 30 years. Alexander Fury looks back at the career of 'America's Chanel'
10 best statement lightbulbs

10 best statement lightbulbs

Dare to bare with some out-of-the-ordinary illumination
Wimbledon 2015: Heather Watson - 'I had Serena's poster on my wall – now I'm playing her'

Heather Watson: 'I had Serena's poster on my wall – now I'm playing her'

Briton pumped up for dream meeting with world No 1
Wimbledon 2015: Nick Bollettieri - It's time for big John Isner to produce the goods to go with his thumping serve

Nick Bollettieri's Wimbledon Files

It's time for big John Isner to produce the goods to go with his thumping serve
Dustin Brown: Who is the tennis player who knocked Rafael Nadal out of Wimbeldon 2015?

Dustin Brown

Who is the German player that knocked Nadal out of Wimbeldon 2015?
Ashes 2015: Damien Martyn - 'England are fired up again, just like in 2005...'

Damien Martyn: 'England are fired up again, just like in 2005...'

Australian veteran of that Ashes series, believes the hosts' may become unstoppable if they win the first Test