What it has produced isn't so much a case of two rights making a wrong, as three rights making a left.
I am referring to the troubled automaker DaimlerChrysler which lost $1.475 billion in 2006 and is put up for sale.
Daimler-Benz AG paid $36 billion for the company in 1998, but industry analysts now place its value at anywhere from nothing to $13.7 billion. Estimates vary with the value placed on assets such as brand names, factories and materials, all weighed against Chrysler's estimated $19 billion long-term liability to pay health care benefits for unionized retirees.
Some analysts say the liability exceeds the value of the assets, meaning that German parent DaimlerChrysler AG would have to pay someone to take Chrysler. Others say the company is worth more to the right buyer.
As two private equity firms examine Chrysler's books and consider making offers to buy the company this week, they'll be grappling with a question whose answer is uncertain: How much is the automaker worth ?
"It's a hard thing to really figure out, and the uncertainty is what the health care liability really means," said David Cole, chairman of the Center for Automotive Research in Ann Arbor. "If that were removed, then it's a wholly different game."
Chrysler was once bailed out with the support of Federal Loan guarantees in the 70’s. Now the Automaker is back in trouble.
The fun is that it’s value varies with the type of buyer. A private equity firm could take the company into bankruptcy, shed its union contracts and then break it into pieces for sale at a handsome profit, he said.
GM could sweep its estimated $50 billion retiree health care liability into Chrysler's and negotiate a deal with the United Auto Workers union to take on the cost at a discounted rate. GM, Cole said, could save billions of dollars on its health care liability by buying Chrysler. If that were done, it could make a pretty good case that GM would be the ideal suitor.
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This is what I call as going down in style. Even as you go broke, there are so many suitors with higher and higher bids. They call it Goodwill - what you pay more than the firm’s intrinsic worth, that is.
Welcome to Corporate derring do !