Revised May 18, 2004
William F. Glavin Center for Global Entrepreneurial Leadership
DaimlerChrysler Merger: The Quest to Create “One Company” Tom Stallkamp, Chrysler president and executive in charge of accelerating integration of the recently merged Daimler and Chrysler companies, was feeling great frustration. Why couldn’t he move the integration process along more rapidly? He could see clearly the amazing potential for payoffs, but it just wasn’t happening. He wasn’t used to being unable to move the organization, and he hated the feeling of being able to visualize great things without being able to mobilize people to action. What else could he do? Maybe it was time to let the two cultures duke it out, and allow the stronger one to win. That would be one kind of integration, though not quite what he had been working for.
At 4:00pm on November 12, 1998 as the final bell rang on the New York Stock Exchange, U.S. automaker Chrysler Corporation and German automaker Daimler-Benz ceased to exist. They emerged the next day as a new global conglomerate named DaimlerChrysler AG. With combined revenues of $130 billion and a market capitalization of $92 billion, DaimlerChrysler became the fifth largest automaker in the world in number of vehicles sold and third largest in sales. The $40 billion stock deal was the largest ever in the industrial world. Upon completion of the transaction Daimler stockholders owned 57 percent of the new DaimlerChrysler and Chrysler stockholders the remaining 43 percent. After ten months of discussions and negotiations between the two companies, the merger was billed as a marriage of equals. It signaled new levels of consolidation within the automotive industry and was heralded as the beginning of a new era where only truly global players would survive. At the May 7, 1998 London press conference officially announcing the merger, Daimler-Benz Chairman Jürgen Schrempp declared, “This is much more than a merger. Today we are creating the world’s leading automotive company for the 21st Century – DaimlerChrysler AG. We are combining to merge the two most innovative car companies in the world. We are committed to making DaimlerChrysler the most innovative competitor this industry has ever seen, one that will set the pace in the automotive world in the next Millennium. We are doing this merger because we share a common passion for making great cars and trucks…..by combining and Dianne C. St. Jean prepared this case under the supervision of Professor Allan R. Cohen, Edward A. Madden Distinguished Professor in Global Leadership, Babson College, as a basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation. Note: unless otherwise indicated, Tom Stallkamp’s quotes are excerpted from interviews with Babson case writers. Copyright © by Babson College 2000. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means – electronic, mechanical, photocopying, recording, or otherwise – without the permission of copyright holders. SE
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DaimlerChrysler Merger BAB041
utilizing each other’s strengths, we will have the pre-eminent strategic position in the global marketplace, for the benefit of our customers. We will be able to exploit new markets, and thereby improve return and value to our shareholders.” Chrysler CEO Bob Eaton added, “We are leading a new trend that we believe will change the future and the face of this industry. As a...