Chrysler sold to Cerberus
PRIVATE EQUITY firm, Cerberus Capital Management, has agreed to buy 80.1% of Chrysler Group.
The private equity firm is paying $7.4bn for the stake and will take-on Chrysler's pension and health-care liabilities.
"We are aware that Chrysler faces significant challenges, but we are confident that they can and will be overcome," said John Snow, chairman of Cerberus Capital Management.
"Cerberus believes in the inherent strength of U.S. manufacturing and of the U.S. auto industry. Most importantly, we believe in Chrysler," he said.
Shares in Daimler Chrysler rose 5.4% in Frankfurt on news of the deal today.
The news was welcomed by unions.
"The transaction with Cerberus is in the best interests of our UAW (United Auto Workers Union) members, the Chrysler Group and Daimler," said president, Ron Gettelfinger.
" We are pleased that this decision has been made, because our members and the management can now focus entirely on the development and manufacture of quality products for the future of the Chrysler Group," he added.
Cerberus already owns 51% of GMAC, the financing unit of General Motors Corp. (GM).
Of the total of $7.4bn, $5bn is going into the industrial business and $1.05bn into the financial-services business. Daimler Chrysler will receive the balance of $1.35bn.
Daimler Chrysler retains 19.9%
Daimler Chrysler will also grant a loan of $400m to Chrysler, and make an $878m prepayment compensation due to Cerberus taking-on the pension scheme.
The US Chrysler firm is to continue co-operating with Daimler's Mercedes Car Group on projects, such as developing conventional and alternative drive systems, purchasing, and financial services outside of North America.
Daimler Chrysler will retain a 19.9% stake in the American manufacturer. "We very much look forward to our continued cooperation as business partners, as we want to continue to reap the mutual benefits of working together," said Daimler Chrysler CEO Dieter Zetsche. "That's one of the reasons why we're retaining an equity position in Chrysler."
* In 1998, Daimler paid $35bn for the Chrysler unit