The Last American CEO by Jason Vines

The Last American CEO by Jason Vines

Author:Jason Vines
Language: eng
Format: epub
Publisher: Waldorf Publishing
Published: 2016-06-28T16:00:00+00:00


Chapter 20 - Icebergs Ahead

In a transaction the size of the sale of American Motors and its diamond-in-the-rough Jeep brand, there are myriad issues to resolve when both parties have different positions that many times are deal breakers. The cry, “Icebergs Dead Ahead,” properly reflected some of the major issues confronting both Chrysler Corporation and Renault and stood in the way of their secret negotiations in the fall of 1986.

However, two critical issues immediately became apparent. The first was Chrysler agreeing to purchase AMC’s entire organization, financial responsibilities, and accept its dealer body, as Renault was planning to abandon the U.S. marketplace, just like the Baltimore Colts pulled out of town and relocated to Indianapolis in the dark of night two years earlier.

The second issue was Chrysler agreeing on a satisfactory financial payment to Renault for the purchase of American Motors. In reality, Chrysler really was only interested in buying the Jeep brand, product line, manufacturing facilities, and engineering team – masters in the art of four-wheel drive. But, it was obvious fairly early in discussions between the parties that the “just Jeep” position was a non-starter for Renault. To get Jeep, the French made clear, all of AMC was going to have to be part of the deal. So, Iacocca said, “Let’s look at the whole company.”

Certainly there were a lot of outstanding people at AMC – many had succeeded at other car companies, like Joe Cappy, and many had excelled in other industries. On top of that, some of the AMC/Jeep dealers could push metal with the best in the business.

But the cost to acquire AMC as a whole seemed enormous for a Chrysler Corporation less than five years from death’s door of near-bankruptcy. Chrysler management knew, for example, that they would have to provide an AMC/Jeep dealer network with a family of cars to replace the existing and planned Renault car lines that the AMC dealer network was then selling with limited success, with the exception of the Renault Alliance.

In addition, Chrysler did not have the capital to rebadge their Chrysler, Dodge, and Plymouth cars and Dodge trucks as AMC vehicles, or develop and produce a new line of cars to compliment the Jeep Cherokee and Wrangler vehicles for the AMC dealers. But, Chrysler Corporation was not going to be able to pick and choose.

Early in 1986, this would be the conundrum Chrysler negotiators would face over the next six months in order to get access to AMC’s jewel – Jeep.

Offer after offer after offer had been presented to Renault and not accepted. Chrysler’s top sales executive and confidante of CEO Lee Iacocca, Ben Bidwell, and Chrysler’s lead banker concluded that Renault didn’t want to sell American Motors. At least not to Chrysler Corporation. In Bidwell’s mind, the deal was going nowhere and Chrysler shouldn’t waste time and energy chasing it anymore, unless there was a sudden, strong indication from Renault that they were willing to make a deal.

Steve Miller, Chrysler’s financial maestro who was the brains behind the company’s negotiations with the U.



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