DaimlerChrysler Ponders Fate of Detroit Diesel Stake
April 29, 1999
Less than a week after Detroit Diesel Corp. reported record first-quarter net income, DaimlerChrysler Chairman Jurgen Schrempp said his company was debating whether to increase its 20% stake in the engine maker or sell out altogether.
Detroit Chairman Roger Penske says the engine maker wants to remain independent and is interested in buying back DaimlerChrysler's share, valued at about $120 million. DaimlerChrysler is also the parent company of Freightliner.
Detroit Diesel was bought by Penske Corp. from General Motors in 1987. It went public in October 1993, selling 4.75 million shares at $20 each. It currently trades at about $25, up 19% this year.
Last week, Detroit Diesel reported net income of $12.5 million, or 51 cents a share, in the first quarter. The company earned $9.7 million, or 39 cents a share, in the same period last year.
If the strong market continues, Penske said he is confident the company will attain its full-year earnings target of 15% above 1998 results.
Detroit Diesel is expected to introduce a new 13.9-liter diesel engine later this year.
"We want to reiterate our intention to maintain an independent path in the marketplace, and to underscore that strategic direction, we have indicated to DaimlerChrysler our interest in the repurchase of their 20% interest in our company," Penske said in a statement.
For more information, visit http://www.detroitdiesel.com.