DaimlerChrysler set to sell Chrysler to Cerberus

Marc

Hunkered Down for the Duration
Staff member
Admin
#1
Chrysler - Like a ping-pong ball....
International Herold Tribune said:
DETROIT: DaimlerChrysler appears ready to sell a controlling interest in the struggling automaker Chrysler Group to Cerberus Capital Management, a private equity firm, people with direct knowledge of the discussions said Sunday.

The deal, which would unwind the 1998 trans-Atlantic merger between Daimler-Benz and Chrysler, could be announced as soon as Monday, these people said. They insisted on confidentiality because of the sensitive nature of the talks.

A deal would conclude three months of discussions that have taken place since DaimlerChrysler announced in February that it was keeping all its options open for Chrysler, including a sale or finding a partner to run the company.

Chrysler lost $1.5 billion in 2006, prompting DaimlerChrysler to announce a restructuring plan for the business, the second such plan in the past seven years. Under the latest turnaround plan, which calls for the company to cut 13,000 jobs, Chrysler is not expected to be profitable again until 2009. DaimlerChrysler is set to announce its first-quarter results Tuesday.

Cerberus emerged as the leading bidder for Chrysler late last week, bankers involved in the transaction said. Over the past few days, officials of both Cerberus and DaimlerChrysler have been involved in detailed discussions.

The terms of the transaction, like the selling price, were not immediately available. Daimler-Benz paid $36 billion for Chrysler in 1998, in a deal that was originally portrayed as a "merger of equals" but turned out to be a takeover of the U.S. company by the German one.

A number of complexities must be solved for the arrangement to go through, including how to account for Chrysler's $18 billion liability for pensions and health care benefits for its current and future workers, people familiar with the discussions said.

Another big question is how Chrysler's unions, including the United Automobile Workers and the Canadian Automobile Workers, would react to the sale of a substantial stake in Chrysler. Leaders of both those unions have said that they opposed the sale of Chrysler.

Along with Cerberus, interested bidders in Chrysler included other private investment firms. The Blackstone Group was considering a joint purchase with Centerbridge Partners. Magna International, the Canadian auto parts company, and Tracinda, the holding company owned by Kirk Kerkorian, also said they had made bids for Chrysler.

It is not clear whether DaimlerChrysler would revert to the old Daimler-Benz name or come up with a new identity for itself.

Andrew Ross Sorkin reported from New York. Mark Landler reported from Frankfurt.
The article...
 
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Randy

Super Moderator
#4
I've been watching on TV...$7.4 Billion or something like that.

$7.4 billion? Wow! That's nearly 2 weeks revenue for Wal-Mart

Dr. "Z" gave a pretty good statement and run down of what's going to happen and everyone seems to be buying in.

Like you said, we'll see.
 
Q

qualityboi

#5
I think whomever buys will have a challenge to keep a viable company going and then make it marketable for a re-sell. I wonder what affect, if any, this will have on their market share or if anyone cares that Cerberus is the mythical dog that guards the gates of Hades. It would make for an intersting hood ornament.
 
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C

Craig H.

#6
FWIW, I have been looking at Motor Trend magazine and the like lately, and some of the designs Chrysler has in the works are exciting. I hope it will work out. There is this little roadster they are working on...
 

Jim Wynne

Staff member
Admin
#7
FWIW, I have been looking at Motor Trend magazine and the like lately, and some of the designs Chrysler has in the works are exciting. I hope it will work out. There is this little roadster they are working on...
The new Dodge Nitro got perhaps the worst review I've ever seen in a recent Consumer Reports magazine. They didn't like anything about it except that it looks good. Reminds me of the fifties. I've driven several different Chrysler products lately (rentals; 300M, PT Cruiser, Jeep Liberty), and they seem OK to me, except the PT Cruiser with a 4-cylinder engine is way underpowered.
 
#8
There is this little roadster they are working on...
And that's their problem. I have a cool-looking 4 cylinder Chrysler that gets 20MPG if I'm lucky. Torque converter just disintegrated into the tranny a little shy of 80k miles. I'd trade it straight up tomorrow for a Civic with the same mileage. As gas prices soar, Chrysler's slogan is still "It's got a Hemi!" I'm beginning to wonder if the formerly Big Auto companies will ever realize that they can't QS/TS/BS their way into quality or if the sun has already set on their regimes. Hello, the most successful automakers today are hardcore Deming followers!
 
N

noboost4you

#9
My 1998 Civic has 145k miles on it and still reaches 25-30mpg. I will have that car until it's stolen.
 

Wes Bucey

Quite Involved in Discussions
#10
:topic: I'm on a road trip with a 2002 Olds Intrigue driving through hills and flatlands, averaging 28 mpg, carrying nearly a thousand pounds of "stuff" (fishing, golf, etc.) in trunk and back seat. I really expected only about 24/25 mpg.

I use cruise control whenever traffic allows. As might be expected from an old guy such as I, no jackrabbit starts and no speeding high enough above the limit to attract Smokeys.

ON TOPIC:
Chrysler makes a nice minivan, but is losing ground to the Japanese and Koreans, who don't charge an arm, leg and unborn child for things Chrysler calls "accessories" and "options" because they are standard on the foreign-designed vehicle, regardless of where assembled.

I never understood Daimler's reasoning in buying Chrysler - all the "synergy" talk was "smoke blowing up someone's nether region."

Synergy would have meant using interchangeable platforms, engines, transmissions, etc.

Question remains - how will the workers get screwed this time?
 
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