AMC Shareholder Vote Closes Chrysler Buyout of AMC
DETROIT (AP) _ American Motors Corp. shareholders overwhelmingly approved Chrysler Corp.’s $830 million buyout offer Wednesday despite strong misgivings by some who mourned the demise of the last major U.S. automaker outside the Big Three.
The approval, much of which was voted in proxies counted before the shareholder meeting at AMC’s headquarters in the Detroit suburb of Southfield, set into motion a flurry of deal-closing document signing by Chrysler and AMC lawyers in New York.
Until Wednesday, when it became a Chrysler subsidiary, AMC was the fourth- largest domestic automaker. The buyout leaves Chrysler, General Motors Corp. and Ford Motor Co. to compete with more than 30 other automakers around the world.
Joseph E. Cappy, AMC president and chief executive officer, told shareholders that Wednesday ″should be regarded as a day of fulfillment, instead of disappointment.″
″I want to disabuse anyone of the notion that this merger is the case of a failing company falling prey to a more successful competitor. AMC is not a failing company,″ Cappy told shareholders.
″Whether we have the financial strength to stay the distance in the face of the burgeoning competition out there - 38 automotive companies worldwide - is another matter entirely. Clearly we do not,″ he said.
Cappy said AMC would have finished 1987 with a ″very good profit″ and described the buyout as ″bittersweet.″
AMC earned $53.7 million in the first half of 1987, its third consecutive profitable quarter. But since 1980, AMC lost $838.6 million, prompting French government-owned Renault to sell its 46.4 percent AMC interest to Chrysler in March.
Cappy said AMC would have earned somewhat less in the second half of the year because of startup costs involved in the fall introduction of the Renault Premier, built at AMC’s new high-tech assembly plant in Bramalea, Ontario.
″We just could not keep the company going long-term without Chrysler stepping in when Renault stepped out,″ Cappy said.
Later, at Chrysler’s Highland Park headquarters, Cappy drove Chrysler Chairman Lee Iacocca around a temporary showroom and up to a podium in a World War II vintage Jeep as loudspeakers blared ″Stars and Stripes Forever.″
″What really makes this a perfect match is we’re really the same kind of people″ at Chrysler and AMC, Iacocca said. ″We aren’t just combining our strengths, we’re increasing them. I think this is a marriage made in heaven.″
Iacocca said the AMC-Jeep lineup will be sold under the name Eagle-Jeep and that Cappy was joining Chrysler as a group vice president in charge of Eagle- Jeep. Cappy will oversee the absorption of AMC into Chrysler.
Several other AMC executives’ appointments at Chrysler also were announced. John Tierney, who until Wednesday was AMC vice president and chief financial officer, was named chairman of Chrysler Financial Corp., Chrysler’s profitable finance and banking arm.
Other non-Renault AMC executives are protected by a contract that guarantees income and benefits through the end of 1989 if they are not hired by Chrysler.
Salaried employees also are protected by an agreement that will give them up to 12 months’ severance pay if they are not hired by Chrysler.
Cappy said Chrysler would maintain AMC primarily as a marketing and distribution subsidiary, but added that one company couldn’t sell another company’s products through its dealers without changing vehicles’ appearances and names.
Several shareholders said they believe that Chrysler’s offer of $4.50 worth of Chrysler stock for each non-Renault share of AMC stock was too low. But Cappy said during the months of publicity surrounding the buyout, no other suitors came forward with a better deal.
The preliminary vote showed 108.3 million shares voted for the merger, that 4.1 million voted against it and that 553,000 did not vote. Of the voting shares, 46 percent were held by Renault.
The Federal Trade Commission closed its investigation of the merger Tuesday, clearing the way for Wednesday’s closing after the shareholder vote. The governments of France and Canada approved the deal earlier.
The acquisition was announced March 9, when Chrysler said it had agreed to buy Renault’s interest in AMC.
The boards of directors of both AMC and Chrysler unanimously approved the buyout in May.
The main prize in the merger will be Jeep Corp., the best-known name in sport-utiliy vehicles, which AMC obtained in 1970. Chrysler had planned to spend more than $500 million developing its own sport-utility vehicle line, but instead will integrate the Jeep lineup. Jeeps primarily are made in Toledo, Ohio.
Chrysler also will pick up the new Bramalea plant and the midsize car that will be produced there this fall - the sleek Renault Premier. The car will be sold as the Eagle Premier, Iacocca said.
Analysts have said both the Jeep products and the Premier will fill holes in the Chrysler lineup and boost its shares of the car and truck markets.
Chrysler already has turned to AMC for extra factory space for its full- size, rear-wheel-drive luxury cars, which are built at AMC’s Kenosha, Wis., assembly plant.
In September, Chrysler plans to begin building its popular Omni-Horizon subcompacts at Kenosha. The cars went out of production in March, when Chrysler’s Belvidere, Ill., factory was retooled for a new model.
Since dealer supplies of the inexpensive little cars have dwindled, Chrysler’s sales have dipped significantly. Analysts said the Omni-Horizon once accounted for as much as 20 percent of Chrysler’s sales.