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Wednesday, 6 May, 1998, 21:00 GMT 22:00 UK
Daimler and Chrysler discuss merger
mercedes
Daimler's most famous product is the Mercedes-Benz car
Germany's largest industrial group, Daimler-Benz, and the American car giant, Chrysler, have revealed they are in merger talks.

Daimler shares surged 8% to 193.60 Deutschmarks (65.25) on the German stock exchange after the discussions were confirmed in a joint statement issued from Daimler headquarters in Stuttgart.

The board of Daimler-Benz, which makes cars, aeroplanes and trains, is expected to consider the merger later this week.

chrysler hq
Chrysler's HQ in Michigan
Chrysler directors may make a decision as early as Wednesday, when they have a board meeting scheduled.

As Daimler-Benz is the larger of the two companies in terms of revenue and market capitalisation, the talks centre on its possible acquisition of Chrysler in an exchange of shares.

Chrysler, the third biggest car manufacturer in the US, could see its value rocket if the deal goes ahead.

Chrysler could be priced as high as $35bn (21bn), compared with its market capitalisation of $27bn (16.3bn), a source close to the talks said.

'Significant process'

One report said if the deal went ahead the management of the two companies would be combined, with Daimler-Benz chairman Juergen Schrempp and Chrysler chief executive Robert Eaton becoming co-chief executives.

The report said that significant progress has been made, but added that as negotiations have foundered at least once, there is no certainty that a deal will be reached.

A merger would create a company with combined worldwide sales of around $130bn (78.3bn).

Motor industry analysts said recent events in Asia have persuaded the two companies that they need to merge resources if they are to compete globally.

See also:

12 Nov 97 | Business
Mercedes puts brakes on A-class car
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