Blackstone leads chase for $10 billion Chrysler division

The Blackstone Group is leading the €10 billion chase for the Chrysler car-making division of German automotive group DaimlerChrysler, although it may face competition from Cerberus and General Motors.

The Blackstone Group is in negotiations with German engineering firm DaimlerChrysler about a possible €10 billion ($13.6 billion) bid for its Chrysler car-making division, as the US buyout giant shows no sign of easing off in its relentless pursuit of new deals.

Chrysler: Blackstone is in the driving seat

Blackstone is currently examining the books of the Chrysler division, which also owns the Jeep and Dodge car brands. The division is likely to be valued at about €10 billion, according to a banking source.

It would not be Blackstone’s first deal in the sector. The buyout firm already owns TRW Automotive, a US car parts maker that it bought for $4.57 billion (€3.49 billion) in 2003.

TRW is currently set to do battle with tyre company Continental for VDO, the €8 billion vehicle parts division of German conglomerate Siemens, according to trade paper Financial News.

However, the buyout group is likely to face competition from a number of other interested parties. These include Cerberus, the US alternative asset manager, and fellow car-maker General Motors, according to the London-based Times newspaper.

The report suggests Chrysler’s $18 billion of healthcare liabilities may yet put potential buyers off making a bid.

GM is well known to Cerberus and Blackstone, who have both bought businesses from the car-maker in the past. Blackstone bought American Axle & Manufacturing, a former division of General Motors, for $928 million almost ten years ago, while Cerberus won last year’s $14 billion auction for GMAC, GM’s commercial finance division.

The deal would be the latest in a series of large transactions for Blackstone, which has been in prolific form since closing a $15.6 billion fund last year. Its pace of deal-making has been so great that the firm has already gone back to investors for more money – it hopes to use a “rights issue” to take its fund beyond the $20 billion mark.

[See Feature: Blackstone – top of the world]