In a development that could reshape the auto industry, German luxury carmaker Daimler-Benz and the No. 3 U.S. automaker Chrysler confirmed Wednesday that they are in talks about a possible merger.
Daimler stocks surged 8 percent on the German stock exchange after the merger talks were confirmed in a joint statement issued from Daimler headquarters in Stuttgart.The structure of a possible merger was not outlined in the brief statement.
Daimler, Germany's largest industrial group, produces luxury autos, trucks and buses via its Mercedes-Benz division. But other Daimler divisions are involved in areas like aerospace, defense and financial services, and it wasn't clear whether they would be included as well.
Industry sources estimated the purchase price, if Daimler bought Chrysler, at $35 billion, significantly above Chrysler's $27 billion stock market value, The Wall Street Journal reported Wednesday.
The companies stressed, however, that at this stage "it isn't certain whether a merger agreement will be reached or whether a merger will actually take place."
Daimler and Chrysler said the merger could take the form of a stock swap, but said they wouldn't comment further before a concrete agreement is in place or the talks have ended.
The Wall Street Journal reported Daimler's board was expected to consider the merger this week. Chrysler's directors had a regularly scheduled board meeting Wednesday.
The announcement is the latest in a series of merger talks in an auto industry headed for huge consolidation as it struggles to remain competitive against a glut of capacity worldwide.
Another German luxury carmaker, BMW, is bidding for Britain's Vickers PLC Rolls-Royce. And Germany's No. 1 automaker Volkswagen, which has been trying to outbid BMW for Rolls-Royce, apparently has set its sights on another luxury automaker. VW's high-end Audi division has said it was considering hooking up with Lamborghini, the Italian luxury sports car maker.
Last year there was market talk about a merger between Chrysler and BMW.
A Daimler-Chrysler combination would generate little overlap in product lines. Chrysler's strengths are in light trucks, minivans and its Jeep sport-utility vehicles. Its cars represent less than one-third of its total production and generally are aimed at the mass market.
Mercedes, on the other hand, has upper-crust appeal and price tags. It first opened its first overseas production plant in the Tuscaloosa, Ala., last year, producing M-Class autos and all-terrain vehicles.