posted 05-14-2007 06:28 AM                  

The German-American automaker said in a statement that an affiliate of Cerberus will hold the majority stake in a new Chrysler Holding LLC while DaimlerChrysler will keep a 19.9 percent stake.

It said that Chrysler would keep its heavy obligations for pensions and health care costs, a key issue complicating DaimlerChrysler's effort to sell the division.

The first thing to go will be the company name, with Daimler AG to replace DaimlerChrysler. A vote by shareholders to approve the change must be held first, likely this fall, the company said.

"We're confident that we've found the solution that will create the greatest overall value _ both for Daimler and Chrysler," said DaimlerChrysler Chief Executive Dieter Zetsche, who oversaw Chrysler before becoming CEO in 2006. "With this transaction, we have created the right conditions for a new start for Chrysler and Daimler."

He 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. "That's one of the reasons why we're retaining a 19.9 percent 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 some $4.05 billion to $5.39 billion for 2007.

The prospect of a sale to a private equity firm had worried unions in the United States because of private equity firms' tendency to slash costs and jobs. But United Auto Workers President Ron Gettelfinger called it the best choice.

"The transaction with Cerberus is in the best interests of our UAW members, the Chrysler Group and Daimler. We are pleased that this decision has been made," he said.

Cerberus Chairman John W. Snow said the deal was a sign of faith in Chrysler, an iconic American brand and third-largest U.S. carmaker behind General Motors Corp. and Ford Motor Co.

"We welcome Chrysler into the Cerberus family of companies and believe Cerberus will be a good home for Chrysler," he said in a statement. "Most importantly, we believe in Chrysler."

Shareholders in Europe were excited about the news, sending the company's stock up more than 7 percent to $87.66.

The sale comes after nearly three months of study and negotiations by several companies interested in buying DaimlerChrysler's troubled U.S. operations.

The deal is a stunning reversal of the 1998 $36 billion merger of Chrysler with Daimler-Benz AG that tried to set the mold for global automotive manufacturers. Despite the pledges and promises of synergies and economies of scale, the two companies struggled to integrate.

As the company's stock price continued to disappoint, Zetsche announced Feb. 14 that all options were open for Chrysler, which lost $1.5 billion last year and is undergoing a restructuring plan that will eventually shed 13,000 jobs.

Last year, GM 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 had said buying a big stake in Chrysler would let Cerberus combine GMAC operations with Chrysler Financial.

In December, Cerberus was part of a consortium of investors that said it would invest $3.4 billion in the struggling auto parts giant Delphi Corp. in exchange for new shares of Delphi stock as it emerged from Chapter 11 bankruptcy protection.

On its Web site, Cerberus said the companies in which it has a controlling or significant minority stakes generate over $60 billion in annual revenues. Its worldwide investments include businesses involved in aerospace and military, autos, building products, retailing, financial services, health care, distribution, paper and packaging, real estate, telecommunications, transportation and travel.

Billionaire investor Kirk Kerkorian, who tried to take control of Chrysler in the 1990s, also has said he would make a bid, but it was apparently spurned.

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AP Auto Writer Tom Krisher contributed to this report from Detroit.

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On the Net:

Cerberus Capital Management LP: http://www.cerberuscapital.com

posted 05-17-2007 07:22 AM                  

quote:

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Originally posted by CJ:
Tom Lasorda is a great manufacturing guy, but the company needs Wolfgang to run it. Perhaps they will ease him into it in time. Would be the smart thing to do.

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Over on the Viper board there was a lot of hope that Wolfgang would step in...

posted 05-19-2007 10:58 AM                  

quote:

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Originally posted by ed monahan:
Did they also obtain Jeep and Dodge ?

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Ed..

CJ & others, would know better than I do.

My understanding is they bought all, and got chrysler financial too...