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On the face of it, though, Nissan is simply too burdened to be much more than a headache to anyone. Analysts estimate that its debt nearly doubles when the financial obligations of its many affiliates are thrown in. "We don't want to spend our hard-earned money buying someone else's hard-earned debt," said Ford CEO Jacques Nasser not long before he bought Volvo. Some top Ford executives were certain late last year that Nissan was worth a serious look, and they went so far as to invite Hanawa to Dearborn. But even before he got there, enough intelligence had come back from Japan that the bloom was way off Nissan. In any case, Nasser never saw the Japanese executive.

Still, the hint of a deal with Ford was enough to pull DaimlerChrysler closer to Nissan, and the German-American auto giant may still step in to save the Japanese firm. Even before Daimler chairman Juergen Schrempp inked a deal to acquire Chrysler for $37 billion last May, his Stuttgart brain trust was urging him to buy a controlling stake in Nissan Diesel. That would give Daimler, a top commercial-truck producer, a solid foothold in Asia.

Now DaimlerChrysler and Nissan are far enough into negotiations that an acquisition of the truck company, or something more complicated, is still a real possibility. Schrempp has made it clear that by 2010 he wants 25% of the company's revenues to come from Asia--and an acquisition would be the quickest way of accomplishing that goal.

In Tokyo in late January, Schrempp and DaimlerChrysler co-chairman Robert Eaton made it clear to Hanawa that they wanted Nissan to restructure further and write off some of the company's gargantuan debt before a deal was consummated. According to one insider, Hanawa balked at a debt write-down. But both sides left themselves plenty of room for a future deal. Said Schrempp at a press conference in Tokyo: "Our only problem is, we're very impatient." He can afford to wait--not least because the merger between Daimler and Chrysler is already proving more difficult and time-consuming than optimists had predicted. Yet in Chicago last month, he hinted again that an acquisition in Asia may not be far off.

If nobody reaches out to Nissan, there is perhaps one ray of hope: critics raved in January when the company unveiled a new Z prototype and a sleek sport utility truck at the North American International Auto Show in Detroit. The Z, an updated version of the sexy 240Z model that captured youthful imaginations in Nissan's heyday, made the covers of several car-enthusiast magazines. What wasn't necessarily made clear was that management in Tokyo had almost blocked the prototypes. They were conceived and built in California at the urging of U.S. executives desperate for new product, using $1 million purloined from the North American sales and marketing budgets. Hanawa now has to get his managers in Tokyo to approve production of the new Z, as well as find the money to pay for it. In today's Japan Inc., that could take a while.

With reporting by Tim Larimer, Sachiko Sakamaki and Hiroko Tashiro/Tokyo and Joseph R. Szczesny/Detroit

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Daily

March 8, 1999

Merger Mania
The deals will keep on coming

Viewpoint
Change is not entirely foreign to Japan


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