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DaimlerChrysler's Aerospace Unit May See IPO
By Ben Klayman
posted: 01:39 pm ET
13 January 2000

daimlerchrysler_2000_000113

DETROIT (Reuters) - DaimlerChrysler AG top executives on Wednesday evening laid out their objectives for 2000, including selling off parts of units, to analysts visiting Detroit for a major auto show, people who attended the meeting said.

The German-U.S. automaker told about 140 analysts at a Southfield, Mich., restaurant that it will look at spinning off a portion of its aerospace unit in the second quarter under an initial public offering once the merger of its dasa unit with France's Aerospatiale Matra and Spain's CASA was completed, said several analysts, who asked not to be identified.

The merged defense-aerospace unit will be named European Aeronautic, Defense and Space Co., and DaimlerChrysler will retain a 33 percent stake in the company after the spinoff, said analysts, in Detroit for the North American International Auto Show.
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Co-Chairman Robert Eaton also said DaimlerChrysler possibly will sell its remaining stake in debitel, a mobile telecommunications firm, for about 300 million euros, analysts said.

The presentation was made by Eaton, North American President James Holden and Chief Financial Officer Manfred Gentz. They also discussed the company's small-car strategy in Europe, product launches, plant capacity issues, U.S. incentives for its Chrysler brands and other financial issues, analysts said.

DaimlerChrysler spokesman Jack Ferry confirmed the meeting was held, but declined to provide details.

Eaton said while no options have been eliminated, it would be less expensive to buy a small-car manufacturer than it would be to build a small-car operation from the ground up, according to analysts.

DaimlerChrysler said it expects to lose about 70,000 units during the fall launch of its new minivans due to retooling at plants in St. Louis and Windsor, Ont., but that is significantly less than the 120,000 units lost in the last major launch of the vehicles during retooling in 1996, analysts said.

The automaker also said it has raised production of the PT Cruiser hybrid vehicle to 180,000 units on an annual basis as its Toluca, Mexico, plant from the original estimate of 100,000-120,000 units, analysts said. The increase was made because of expected heavy demand for the vehicle.

DaimlerChrysler expects to offset any losses from the product launches of the minivan, PT Cruiser and Mercedes C-Class through productivity gains and other cost-cutting, analysts said.

The world's No. 5 automaker also said its 1999 fourth-quarter consumer incentives on its Chrysler, Dodge, Plymouth and Jeep brand products were $1,469 per vehicle, down from $1,573 per vehicle in the third quarter, analysts said. However, that was up from the fourth quarter of 1998, when the rate was $1,231 per vehicle.

Executives at the company have repeatedly said their incentives trail the level of those at their U.S. competitors.

DaimlerChrysler will report 1999 financial results on Feb. 28 and hold its annual shareholders' meeting in Germany on April 14.


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