DaimlerChrysler AG said Monday it will sell more than 80 percent of its money-losing Chrysler Group to private equity firm Cerberus Capital Management LP for $7.4 billion, unwinding its nearly decade-old deal to merge the U.S. brand with Mercedes-Benz.
The German-American automaker said in a statement that an affiliate of Cerberus will acquire 80.1 percent in the new Chrysler Holding LLC while DaimlerChrysler will keep a 19.9 percent stake. It said that obligations for pensions and healthcare costs would be retained by the Chrysler companies.
Shareholders will decide on changing the company’s name to Daimler AG.
Pretty much all the articles appearing this early in the process are the usual “analyst” and opinion pieces. Useless.
Last year, General Motors Corp. sold a majority stake in its General Motors Acceptance Corp. financing arm to a consortium of investors led by Cerberus for about $14 billion. Analysts have said buying a big stake in Chrysler could be attractive to Cerberus because it could combine GMAC operations with Chrysler Financial.
In case you wondered, Cerberus was the guardian of the gates of Hell.
As long as they keep to Dodge Hemi engines, no big deal.
So now Cerebus has GM and Chrysler as two of its heads – how long before Ford signs up?
It’s sad that Chrysler could never get away from gas hogs. While most imports saw the gas crunch coming. Domestics saw dollar signs in selling big vehilcles to stupid consumer’s.
Im sure that big changes are in the works! That means job cuts!!
It’s time we as consumer’s get with the rest of the world and try and conserve! That means buying fuel efficient practicle vehicles.
Cerberus will bring back the automotive industry back to it’s roots.
Military vehicles and fleet vehicles, where the real money is.
Why should NA auto makers build cars that can outrun a state trooper and costs below 40K$? Or out-tank it?
Poor management, stale designs and suffocating labor costs. The US auto industry is a model for the world to follow.
It’s worth remembering that Daimler paid $36B for Chrysler back in 1998, in a very dodgy deal that was dishonestly sold to shareholders. It has to be counted as part of the late 90’s bubble. (What finally happened to Jurgen Schrempp, the former Daimler CEO who was being hounded by shareholders for his role in all this?)
And with this sale coinciding with Siemens executives being convicted for bribery, it’s a reminder that German business can be as screwed up as the American sort.
The guard dog of the gates of hell chased the car and caught it. Now what?
Cerebus purchased Albertson’s and stated in all major news media that they would not close any stores here in Texas. Well, they have closed many stores and now it is a known fact with their employees that they will close all stores nationwide soon. If I were Chrysler employes, I would find a job quickly.
Sold at a loss of 80% over the original purchase price.
This is actually much worse than AT&T’s loss on its cable assets. AT&T purchased TCI for $48 billion (plus assuming $16 billion of debt) and MediaOne for $54 billion in the late 1990s, and sold them to Comcast just a few years later for $44.5 billion.
#8 – Gary
The step that comes before “find another job” is “develop some marketable skills” because $35/hour-plus-overtime line jobs are awfully scarce these days.
I liked Gettelfinger’s comments. Basically he said, ‘we fought and fought and begged and pleaded for Diamler not to sell, but they wouldn’t listen, so we’re behind the deal.’ Way to stick it to the man, Ron! Solidarity!
Being a Chrysler employee for the last nine years has led to many uncertainties and disappointments. When I started, Chrysler was a very profitable company with great ideas and innovation. Daimler then “merged” with us, and told us our company was headed in the wrong direction. Our quality was bad, and we improved drastically. The company seemed on the rebound. Then in February, we were told that 13,000 more jobs would be cut. Then, I woke up this morning to this news. Perhaps we can be more certain now. There will be cuts. I will be graduating next May in education, so I’m not concerned about my well-being. I am concerned about my father who worked 35 years in conditions that were far worse then today. He deserves his retirement. I am concerned for the great people of Chrysler who do not have backup plans. I am concerned for the 30-50 year olds with children and families to care for. Some say we’re overpaid and have too good of benefits, and we deserve everything we lose. I say come do my job this summer, when it is 120 degrees in the building. Breathe in the smoke and fumes, wear long pants, and don’t forget to kiss your family goodbye, because you won’t see them working my shift. But please, when this deal is done, help out my friends who have lost their jobs. They are good workers.
Hope they kicked the tires first.
7- Damn flyingelvis, you finally came up with a clever comment. LOL
“…an affiliate of Cerberus will acquire 80.1 percent in the new Chrysler Holding LLC while DaimlerChrysler will keep a 19.9 percent stake. It said that obligations for pensions and healthcare costs would be retained by the Chrysler companies”
Pretty sweet deal for Cerberus. Aquire 80% of the company for a song and none of the financial drag of pensions and healthcare. If I were Chrysler employee I would be concerned about the 20% stake holder declaring bankruptcy in the near term and not honoring these obligations.
makin a deal with the devil…
Great point, #14. That is exactly what is going to happen. There are few regulations regarding hedge funds, and they have been ruthless in their orientation. The key point though is who pays when a company goes bankrupt? We all do. When United went under, the taxpayer was left funding United employees pensions albeit at a much lower rate.
A few of these hedge funds like Texas Pacific do attempt to turn a company around, but I doubt this is the case here. The government should step in and stop this sale or negotiate a way so the taxpayer cannot get fleeced, but I doubt it will.
Not to be picky but Cerberus was the guardian of the gates of Hades, not Hell.
The taxpayer doesn’t get fleeced if the government refuses to pick up the obligations.
#18…MikeN…fat chance of that happening if the Democrats win the WH in 2008.
This should get a good *discussion* going. 🙂
So what happen to the owners of the cars they are selling with life time warranty? They had lie plain and simple to get as much money as they can in this last breath?