Lee Iacocca, the esteemed former chairman of Chrysler, has privately thrown his support behind Kirk Kerkorian’s $4.5 billion (£2.3 billion) cash offer for the ailing American carmaker and is considering a return to the company that he famously saved from bankruptcy.

Terry Christensen, a Los Angeles lawyer representing Mr Kerkorian, told The Times last night that he had discussed the bid with Mr Iacocca within the past few days and that the former Chrysler chief expressed delight.

“Lee and Kirk are close friends and have been involved with each other before, and they are both close friends and clients of mine,” Mr Christensen said.

“Lee thinks [the Kerkorian bid] is great and he would be happy to help in any way he can.”

Mr Iacocca, meanwhile, refused to endorse publicly any of the bids made for Chrysler. The former Chrysler chairman said: “I am neutral. I only want the best deal to keep the company together. Chrysler, the employees and the dealers deserve nothing less.”

Mr Kerkorian and Mr Iacocca joined forces in 1995, when the billionaire investor made an abortive attempt to buy the Detroit carmaker.

Mr Iacocca, one of the most famous business executives in America, is celebrated for saving Chrysler from bankruptcy in the 1980s.

The company was swamped with debt and sales were falling because the company manufactured too many gas-guzzling trucks and eight-cylinder “land yachts” when oil prices were soaring.

Mr Iacocca cut thousands of jobs, got rid of the company’s European arm and brokered an historic loan guarantee from Congress to turn Chrysler’s fortunes around.

Chrysler, which merged with Daimler, of Germany, in a $40 billion deal in 1998, is in a similar position today. Oil prices are high and Chrysler sales are dwindling in the face of stiff competition from Asian manufacturers such as Toyota.

The company is also saddled with more than $15 billion of employee liabilities, mainly made up of pension and health-care costs. DaimlerChrysler has put the division up for sale in the face of these problems.

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