How Daimler snared an American icon

Behind the scenes of the blockbuster deal that turned Chrysler over to the Germans

By Bill Vlasic and Bradley A. Stertz / The Detroit News

    It was the deal heard round the world.

    In May 1998, a stunning $36 billion merger was announced by Chrysler Corp., the all-American maker of Jeeps and minivans, and Daimler-Benz AG, the German maker of Mercedes-Benz luxury cars. The deal rocked the global auto industry and ushered in an epic era of consolidation.

    But the union of Daimler and Chrysler didn’t turn out to be a marriage made in heaven as shown in the new book Taken For A Ride: How Daimler-Benz Drove Off With Chrysler. The merger was hailed as a “merger of equals,” but the hype backfired amid a clash of cultures and personalities. When the dust settled, Daimler had bought Chrysler, and the shock waves reverberated on both sides of the Atlantic.

    The seeds of the DaimlerChrysler deal were sown in 1995, when Chrysler fought off a takeover bid by its biggest shareholder, themysterious billionaire Kirk Kerkorian, and its retired chairman, the legendary Lee Iacocca. Their startling grab for the smallest of the Big Three carmakers sparked secret talks between Chrysler and Daimler on a massive joint venture.

    The first talks broke down, but set the stage for the final talks between Daimler Chairman Juergen Schrempp and Chrysler Chairman Robert Eaton. Schrempp emerged as the unquestioned leader of DaimlerChrysler. Eaton abdicated power by agreeing to retire in three years. Caught in between was Chrysler President Tom Stallkamp, who lost his job in a showdown with Eaton.

    DaimlerChrysler, applauded as the grandest in cross-cultural experiments, instead became a cautionary tale of the risks and rewards of going global.