It seems that selling off some of the group brands of US carmakers may take centre stage amid the threat of bankruptcy looming large over three large US carmakers, which means M&M is a step closer to buying out Chrysler''s Jeep brand. In fact, sources say that unlike last month, now M&M is keen on just Jeep not Dodge since it wants to stay focused on utility vehicles. Chrysler appointed investment bankers have already approached M&M and management level talks are likely in mid January.
M&M will get access to a 50 statewide dealer network in the US and also two plants in Toledo, Ohio, one in Belvidere, Illinois, and one in Detroit, Michigan. These plants do produce some Dodge badged vehicles but are mostly Jeep specific. The Chrysler arm of DaimlerChrysler was sold to Cerberus in 2007 at about $7.2 billion. But given the financial situation of the business today, Jeep is likely to cost M&M in the range of $2.5-3 billion. M&M has a $54 million debt on its books at this point and has recently acquired Kinetic''s two-wheeler business. More significantly the company''s current debt-equity ratio stands at 1.6x which seems worryingly high.
Chrysler is under pressure to scale down production and sell its few brands. With auto bailout package quite far, the company''s investment bankers have also approached investors in the Middle East, China, Russia. But the Chrysler management is keen to go with Mahindra which now has frontrunner status and chances are untangling Dodge from Jeep may be impossible and so M&M may get Dodge thrown in to sweeten the deal.
M&M will get access to a 50 statewide dealer network in the US and also two plants in Toledo, Ohio, one in Belvidere, Illinois, and one in Detroit, Michigan. These plants do produce some Dodge badged vehicles but are mostly Jeep specific. The Chrysler arm of DaimlerChrysler was sold to Cerberus in 2007 at about $7.2 billion. But given the financial situation of the business today, Jeep is likely to cost M&M in the range of $2.5-3 billion. M&M has a $54 million debt on its books at this point and has recently acquired Kinetic''s two-wheeler business. More significantly the company''s current debt-equity ratio stands at 1.6x which seems worryingly high.
Chrysler is under pressure to scale down production and sell its few brands. With auto bailout package quite far, the company''s investment bankers have also approached investors in the Middle East, China, Russia. But the Chrysler management is keen to go with Mahindra which now has frontrunner status and chances are untangling Dodge from Jeep may be impossible and so M&M may get Dodge thrown in to sweeten the deal.
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