Apr 3, 2007 By Matt Moore And Tom Krisher Ap Business Writers 4 min read

FRANKFURT, Germany (AP) – Only one theme is expected to dominate DaimlerChrysler AG’s annual shareholder meeting this week: How soon can the U.S. Chrysler unit be sold off and when can the company go back to being Daimler-Benz AG? But despite boisterous calls by shareholder groups that want to see the German-American automaker carve off its U.S. counterpart and become completely German again, those looking for the answers are likely to go away disappointed.

Though the company has not even confirmed it is in talks to sell off Chrysler, for which it paid some $36 billion in 1998, speculation has run rampant that a deal is in the offing. Most analysts, however, do not believe any announcement will come at Wednesday’s meeting where some 8,000 shareholders will fill the Berlin Messe and pepper the board with questions and comments.

“This is an unlikely venue for such an announcement,” said Stephen B. Cheetham, a research analyst for European autos with Sanford C. Bernstein Ltd. in London.

“They will not normally be tied to the timetable. It’s highly unlikely that we will get an announcement for this meeting.”

In a filing with the U.S. Securities & Exchange Commission last week outlining the meeting, there is no motion to consider the sale of Chrysler, which has been on the table since Chief Executive Dieter Zetsche said Feb. 14 that all options for the unit were on the table.

At least some of the company’s more-than one million shareholders have been pushing for a divorce from Chrysler both in style and substance.

Ekkehard Wenger and Leonhard Knoll have put forth such a motion, calling for the company to revert back to its original name, Daimler-Benz AG.

They argue in the motion that to “maintain a corporate name that evokes associations with the failure of the business combination with Chrysler is detrimental to the image of the corporation and its products.”

But the big issue will be what to actually do with Chrysler.

Holger Rothbauer, a member of KADC Critical Shareholders-DaimlerChrysler, which opposed the 1998 acquisition, said he suspects Zetsche made his February announcement as a way to stem shareholder dissent at the annual meeting.

“I think they tried to do everything at the moment, especially in terms of Chrysler, to pacify people because they assume that there would be a major outburst at the shareholder meeting,” Rothbauer said.

Though he opposed the merger, he is against selling Chrysler now because it is undervalued. Instead, he wants to see the unit fixed and then disposed of for a bigger gain.

No matter when Chrysler is sold, if ever, Daimler is unlikely to make back what it paid. Analysts value the unit anywhere from nothing to $13.7 billion.

Estimates vary with the value placed on assets such as brand names, factories and materials, all weighed against Chrysler’s estimated $19 billion liability to pay healthcare benefits for unionized retirees.

Some analysts say the liability exceeds the value of the assets, meaning that DaimlerChrysler would have to pay someone to take Chrysler. Others say the company is worth more to the right buyer.

Rothbauer also said joining with Chrysler tainted the Mercedes image of quality.

His group, he said, would demand the ouster of Zetsche, whom he blames for getting Daimler-Benz into the deal in the first place.

So far no clear buyer has emerged, but Canadian auto-parts supplier Magna International Inc. has reportedly submitted a bid to buy Chrysler for between $4.6 billion to $4.7 billion. Major private equity firms Blackstone Group and Cerberus Capital Management LLP are also rumored to be in the hunt after both perused Chrysler’s books during a visit to its Auburn Hills, Michigan-based headquarters in February.

Another name touted as a possible buyer has been General Motors Corp., which reportedly expressed interest shortly after Zetsche’s announcement in taking over Chrysler in exchange for a stake in GM.

Alex Neuberger, an analyst who follows DaimlerChrysler for the CA Cheuvreux brokerage in Frankfurt, said Zetsche is under intense pressure from German shareholders to get rid of Chrysler.

He suspects Zetsche was dismayed in February, when another round of restructuring was announced, that Chrysler CEO Tom LaSorda could only promise a 2.5 percent return on sales by 2009.

The rate of return was low considering it would be after the restructuring took hold and numerous new products would hit the market, Neuberger said.

“If 2.5 percent is everything, I think he said ‘Hey guys, let’s pull the plug,”‘ Neuberger said. “It’s a horrible cash drain to DaimlerChrysler,” Neuberger said. “We just lost confidence that this business can be turned into a value-creating business. If you can’t do that in nine years, how can you do it in the next nine years?”

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AP Business Writer Tom Krisher reported for this story from Detroit.

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On the Net:

http://www.daimlerchrysler.com

AP-ES-04-02-07 1029EDT