Monday, May 14, 2007
CHRYSLER IS FINALLY SOLD
RV Business
Monday, May 14, 2007
DaimlerChrysler AG said Monday (May 14) it will sell 80.1% of its money-losing Chrysler Group to private equity firm Cerberus Capital Management LP for $7.4 billion, unwinding a troubled 1998 combination aimed at creating a global leader.
The Associated Press reported that the deal is a stunning reversal of the $36 billion takeover of Chrysler by Daimler-Benz AG that tried to set the mold for global automotive manufacturers. It also represents a huge bet for Cerberus, which has agreed to take on billions of dollars in pension and retiree health care costs at Chrysler.
"We're confident that we've found the solution that will create the greatest overall value – both for Daimler and Chrysler," said Chief Executive Dieter Zetsche, who oversaw Chrysler before becoming DaimlerChrysler CEO in 2006. "With this transaction, we have created the right conditions for a new start for Chrysler and Daimler."
Shareholders reacted positively, sending DaimlerChrysler's shares up more than 7% after the deal was announced, before settling back at 64.04 euros ($86.36) for a gain of 5.6%.
Zetsche added that the two companies would still work together, particularly on existing conventional and alternative drive systems, purchasing, sales and financial services outside North America.
"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," Zetsche said in a statement. "That's one of the reasons why we're retaining a 19.9% equity position in Chrysler."
DaimlerChrysler said the deal is likely to be complete by the third quarter and that it would reduce its overall profit by as much as $5.4 billion for 2007.
Shareholders must approve changing the company's name to Daimler AG. A vote will likely be scheduled this fall, the company said.
The German-American automaker said an affiliate of Cerberus will hold the majority of a new Chrysler Holding LLC, while DaimlerChrysler will keep a 19.9% stake. Chrysler will keep its heavy obligations for pensions and health care costs — a key issue complicating DaimlerChrysler's effort to sell the division.
Monday, May 14, 2007
DaimlerChrysler AG said Monday (May 14) it will sell 80.1% of its money-losing Chrysler Group to private equity firm Cerberus Capital Management LP for $7.4 billion, unwinding a troubled 1998 combination aimed at creating a global leader.
The Associated Press reported that the deal is a stunning reversal of the $36 billion takeover of Chrysler by Daimler-Benz AG that tried to set the mold for global automotive manufacturers. It also represents a huge bet for Cerberus, which has agreed to take on billions of dollars in pension and retiree health care costs at Chrysler.
"We're confident that we've found the solution that will create the greatest overall value – both for Daimler and Chrysler," said Chief Executive Dieter Zetsche, who oversaw Chrysler before becoming DaimlerChrysler CEO in 2006. "With this transaction, we have created the right conditions for a new start for Chrysler and Daimler."
Shareholders reacted positively, sending DaimlerChrysler's shares up more than 7% after the deal was announced, before settling back at 64.04 euros ($86.36) for a gain of 5.6%.
Zetsche added that the two companies would still work together, particularly on existing conventional and alternative drive systems, purchasing, sales and financial services outside North America.
"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," Zetsche said in a statement. "That's one of the reasons why we're retaining a 19.9% equity position in Chrysler."
DaimlerChrysler said the deal is likely to be complete by the third quarter and that it would reduce its overall profit by as much as $5.4 billion for 2007.
Shareholders must approve changing the company's name to Daimler AG. A vote will likely be scheduled this fall, the company said.
The German-American automaker said an affiliate of Cerberus will hold the majority of a new Chrysler Holding LLC, while DaimlerChrysler will keep a 19.9% stake. Chrysler will keep its heavy obligations for pensions and health care costs — a key issue complicating DaimlerChrysler's effort to sell the division.
