I have spoken from time to time, most recently here, about how struggling publicly traded companies are becoming easy targets for large hedge fund operators, who buy them up, take them PRIVATE, strip the value by (usually) selling all the valued assets, and leaving the carcass of the old company by the side of the road.
Hedge funds are MASSIVE new-power money in the corporate game. They are privately held, and therefore have no reporting or regulation on activities, etc. These are the New Entrepreneurs. They usually seek to return at least 20% interest on their activities, depending on their fund, and the investors in the fund, which can be corporate retirement fund managers, insurance companies, etc. Big Money.
Struggling public corporations are some of their favorite targets, especially those who are bogged down with union labor troubles.
And it seems that the Chrysler division of Daimler-Chrysler is set to be the next victim.
Mr. Mustache has apparently decided that the Daimler-Benz purchase of Chrysler, only a few short years ago, was a bad idea. Duh.
So now they want out. Chrysler is up for sale and there are three bidders. The first two are hedge funds, and the third is an auto parts maker from Canada.
Here's how this will work:
One of the two hedge funds will will the bidding war, and Dieter will get his money back on a bad decision. The United Auto Worker's Union will come unglued, because they wanted the auto parts manufacturer to win the bid, they won't have enough money. The new ownership will be private, not public, and trading in the stock will cease, and any further public financial reporting will cease.
Then, the new owner will look at the assets, and begin to parcel them up for sale.
First on the block will be JEEP. The new owner will separate JEEP from the Chrysler flock like a well trained sheep dog separates a weak lamb from its mommy. It will be packaged up all pretty and sold to the highest bidder. Other bits will be sold off as well. The fund will realize its return, the major players in the transaction will get massive paydays, and Chrysler will cease to exist as it is presently constituted...
And then it's on to the next payday.