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Cerberus buys Chrysler majority Cerberus buys Chrysler majority
(10 minutes later)
Carmaker DaimlerChrysler has said that it has completed a deal to sell a majority stake in its ailing US Chrysler arm to a private equity firm. Carmaker DaimlerChrysler has said that it has completed a deal to sell a majority stake in its ailing US Chrysler division to private equity.
Cerberus Capital Management is paying 7.4bn euros ($10.1bn; £5bn) for 80.1% of the company. An arm of Cerberus Capital Management will pay 7.4bn euros ($10.1bn; £5bn) for 80.1% of the company.
"Today a new chapter in our company's history begins," said DaimlerChrysler chief executive Dieter Zetsche."Today a new chapter in our company's history begins," said DaimlerChrysler chief executive Dieter Zetsche.
World credit-market turbulence had led to concerns that Cerberus would be unable to raise the money.World credit-market turbulence had led to concerns that Cerberus would be unable to raise the money.
This would have meant that the deal collapsed. This would have meant that the deal collapsed, as lenders restricted access to cash amid nervousness about the market.
But DaimlerChrysler said that the terms of the deal were largely unchanged from those agreed in May. DaimlerChrysler and Cerberus said that, as a result, they had decided to help with the financing.
The sum is much less than the $36bn paid for Chrysler in its 1998 merger with Daimler-Benz. The ailing Chrysler business lost $1.46bn in the first three months of 2007.
The remaining part of the company will be renamed Daimler, subject to shareholder approval.The remaining part of the company will be renamed Daimler, subject to shareholder approval.
Cost-cutting
Chrysler's future has been in the balance as it battled against huge losses - including $1.46bn in the first three months of 2007.
The acquisition comes nearly a decade after the $36bn merger of the company behind the Jeep and Dodge brands and the former Daimler-Benz AG.
Along with other US car firms, Chrysler has suffered from falling profits and increased competition from Japanese car firms - slumping to fourth place in the US light vehicle market behind Toyota.
Like its US peers, the group has also embarked on a significant reorganisation plan, which includes 13,000 job cuts.
Founded in 1992, Cerberus specialises in snapping up ailing firms and reviving them by means of heavy cost-cutting.
It currently owns about 50 companies with combined revenues of more than $60bn.
Analysts have said that the deal illustrates the continued interest of Cerberus in the auto industry.
In 2006, GM offloaded a majority share in its finance arm, General Motors Acceptance (GMAC), for some $14bn to a group that was headed by Cerberus.