Reply #46: Chrysler spinoff seen as likely option - analysts

[Ghost Dog]

http://yahoo.reuters.com/news/articlehybrid.aspx?storyID=urn:newsml:reuters.com:20070215:MTFH15010_2007-02-15_15-27-21_L15501917&type=comktNews&rpc=44

FRANKFURT, Feb 15 (Reuters) - Spinning off Chrysler on the stock market may be easier and faster than finding someone to buy the loss-making North American arm of DaimlerChrysler (DCXGn.DE: Quote, Profile , Research), analysts said on Thursday.

Indian or Chinese carmakers eager to expand into the world's biggest car market might find Chrysler an attractive opportunity, and a handful of European carmakers could use some of its spare capacity.

But Chrysler's unionised workforce, unfunded health and pension liabilities, and hefty losses will make investors think twice about taking on any financial exposure, they said.

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In a research note, Dresdner said separating Chrysler from its German parent seemed possible because the official German document for reporting the legal obligations of DaimlerChrysler AG makes no mention of Chrysler's healthcare liabilities.

"The absence of Chrysler's 15.8 billion euros in unfunded healthcare obligations would thus not weigh on Daimler post a de-merger. We believe the remaining 2.6 billion pension obligations would not hinder a de-merger decision," it added.

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