---
title: "Daimler-Benz → Chrysler"
url: "https://mahouse.world/ma-deals/daimler-benz-buy-chrysler-1998"
type: "M&A deal"
year: "1998"
---

# Daimler-Benz → Chrysler

Billed as a "merger of equals" between the maker of Mercedes-Benz and the smallest of Detroit's Big Three, the $38bn share exchange of 1998 was the largest cross-border deal to that date; nine years later Daimler sold control of Chrysler for a fraction of the price.

Presented as a merger of equals and unwound in 2007 at a fraction of the price; the standard case study in cross-border cultural failure.

- **Acquirer:** Daimler-Benz (Germany)
- **Target:** Chrysler (United States)
- **Value:** $38B
- **Announced:** May 1998
- **Completed:** November 1998
- **Sector:** Consumer
- **Deal type:** merger

## Why it mattered

Chrysler came to the deal strong, fresh from the second-best year in its history with its Jeeps, pick-ups and minivans, and Daimler-Benz's chairman, Jürgen Schrempp, presented the two as a perfect fit of leaders in different markets. Under the agreement signed on 7 May 1998, Chrysler shareholders received 0.547 shares of the new DaimlerChrysler for each share and Daimler-Benz shareholders one for one, leaving Daimler-Benz's investors with about 57% of the company and Chrysler's with about 43%. The contract promised a governance structure "reflecting" a merger of equals: Schrempp and Chrysler's Robert Eaton as co-chairmen for three years, operational headquarters in Stuttgart and Auburn Hills, and a management board drawn from both sides. The companies forecast $1.4bn of benefits in 1999, rising to $3bn a year within three to five years, with no plant closures or lay-offs. Kirk Kerkorian's Tracinda, holding about 14% of Chrysler, agreed to vote in favour, and DaimlerChrysler shares began trading in Frankfurt and New York that November.

## What it left behind

The balance did not last. Once Eaton retired it became clear that Daimler would take control, and Chrysler executives such as Thomas Stallkamp and Bob Lutz were soon forced out. The shared platforms meant to produce the synergies were used on only a few models. Investors went to court over whether the deal had been a takeover all along: a class action was settled in 2003 for $300m, while Kerkorian's own suit was dismissed in 2005, and Schrempp left at the end of that year. After Chrysler lost $1.5bn in 2006, Daimler agreed in May 2007 to sell 80.1% of it to Cerberus Capital Management for $7.4bn, most of it to be invested in Chrysler rather than paid to Daimler, and renamed itself Daimler AG. It wrote its remaining stake down to zero in 2008 and gave it up in 2009, the year Chrysler filed for bankruptcy; Chrysler passed to Fiat and later into Stellantis, while Daimler became Mercedes-Benz Group in 2022. Calling a takeover a merger of equals may ease the vote, but it promises a balance of power the share register does not support, and settling which it really was can occupy managers and courts for years.

Source: https://en.wikipedia.org/wiki/Mercedes-Benz_Group