Chrysler Rumor Mill Reaches a Fever Pitch

DETROIT — Even as Chrysler Group CEO Thomas LaSorda sought to soothe the company's uneasy employees via e-mail, media speculation over the ultimate fate of Chrysler reached a frenzied pitch on Friday.

Volkswagen was the latest multinational carmaker to deny an interest in acquiring the ailing U.S. auto group from parent DaimlerChrysler. DCX Chairman Dieter Zetsche triggered the initial spate of publicity with his announcement that the company would pursue "all options" in response to Chrysler's financial skid, including a spin-off or sale.

In Europe, the Financial Times reported that at least four private-equity groups are holding preliminary talks to buy Chrysler. Reports in Europe say DaimlerChrysler's asking price is 10 billion euros — about U.S.$13 billion.

Among the U.S. private-equity groups said to be in discussions with DaimlerChrysler are Apollo Management, Blackstone Group, Carlyle Group and Cerberus Capital Management. The auto unit of Cerberus is run by David Thursfield, an auto-industry veteran who once ran Ford's European operations.

VW joined a string of corporate deniers that now includes Fiat, Hyundai, Mitsubishi and Renault-Nissan. In response to press speculation, all have said they have no interest in acquiring Chrysler, which posted an operating loss of $1.5 billion in 2006.

Press pundits also suggested that one or more state-owned Chinese automakers could be preparing to make a bid for Chrysler. Prospective bidders could include First Auto and Shanghai Auto, the country's two largest carmakers.

Another oft-rumored suitor, General Motors, has declined to comment on media speculation that it has discussed a possible platform-sharing arrangement with Chrysler, similar to the deal under which Chrysler next year will provide VW with a version of its redesigned 2008 Town & Country minivan.

In Detroit, LaSorda has sought to reassure nervous employees and dealers with a series of e-mails and conference calls, according to local press reports.

Chrysler began sending out terms of its latest early-retirement and buyout packages, which aim to cut 13,000 blue- and white-collar workers from the payroll. The initial package, which is being presented only to salaried non-union employees, offers early-retirement incentives to workers as young as 53. Chrysler hopes to eliminate 1,000 white-collar jobs by June and another 1,000 by 2008. The company's contract with the United Auto Workers expires later this year.

LaSorda told employees that a potential deal to sell or spin off Chrysler could take "months" rather than weeks to negotiate.