Chrysler, Daimler announce merger

Chrysler Corporation and Daimler Benz of Germany officially announced their merger. The Chairmen of both companies celebrated the birth of Daimler Chrysler at a news conference in London.

It's a $40 billion deal. That's biggest industrial merger in history.

The new company combines the number-three North American car manufacturer with a German car maker renowned for its ability to make luxury automobiles.

So far, the agreement has been welcomed by almost everyone. The leader of the Canadian Auto Workers, Buzz Hargrove, likes what he sees. He says the two companies operate in very different markets and there won't be a loss of jobs.

Wall Street is also celebrating. Chrysler stock surged nearly 18 per cent on the news Wednesday.

At the moment Chrysler is covered under the auto pact. One industry analyst questions whether the new company will still be eligible for the special tax breaks that come with the auto pact. Hargrove insists this won't be a problem.

The 1965 auto pact agreement between the U.S. and Canada permits Chrysler, Ford, General Motors and Volvo Canada to import cars and parts from anywhere in the world duty-free in return for meeting certain production and Canadian value-added requirements.

Japanese companies have not been part of the agreement. They have been putting a lot of pressure on politicians to make changes to the auto pact.

Chrysler employs about 10,800 workers in Canada, most in southern Ontario. The smallest of the Big Three automakers in Canada, it plans to add another 1,000 workers this year.

Dailmer Chrysler becomes the fifth-largest carmaker in the world. The deal still has to be approved by the U.S. government.