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An update on the 1998 merger
"Two years ago, Juergen Schrempp stood triumphantly on a London stage and pledged that the newly created Daimler-Chrysler AG would have the size, the profitability and the reach to take on everyone.' The combination, he said, would be 'the most profitable automotive company in the world.'
It hasn't worked out that way. Daimler-Chrysler shares are trading at half the height they reached following the company's official creation in November 1998. The company's market capitalization has plummeted to about $53 billion, less than the $57 billion Daimler-Benz AG alone was worth just before its acquisition of Chrysler Corp. was announced. Outside the company, the saga shows how tough it is to make a global merger work. Inside, the shares' tailspin has eroded the personal portfolios of company executives, contributing to an exodus of talent.
In short, the merger of Germany's Daimler-Benz and America's Chrysler is failing to live up to expectations, both of insiders and outsiders ...
Promised 'synergies,' or merger-related cost savings, are looking questionable. Merger-related savings were supposed to amount to $3 billion yearly by 2001, but they aren't tracked as aggressively as they were initaially, the result of tension between Daimler-Benz officials, who feared their sterling Mercedes brand would be hurt, and Chrysler officials, who were accustomed to paring costs."
Source: Jeffrey Ball and Scott Miller, "DaimlerChrysler's Wrong Turns," The Wall Street Journal, July 26, 2000.