DaimlerChrysler marriage breakup to cost €2.5 billion
Giant German carmaker DaimlerChrysler AG said Wednesday the breakup of its corporate marriage with US auto group Chrysler would cost the Stuttgart-based company €2.5 billion ($3.38 billion) this year.
At the same time, DaimlerChrysler said Q2 earnings before interest and tax (EBIT) dropped to €2.13 billion ($2.9 billion) with turnover falling by 3%, despite a strong performance by flagship Mercedes Benz group. DaimlerChrysler reported a Q2 EBIT in 2006 of €2.37 billion ($3.23 billion). Second-quarter revenue fell to €23.8 billion ($32.5 billion) this year. The €2.5 billion charge for ending the merger is lower than the €4 billion ($5.45 billion) that DaimlerChrysler had previously projected the cost of ending the nine-year Chrysler partnership would be. The release of the figures comes as the Stuttgart-based auto group prepares to finalize the end of its partnership with Chrysler after selling an 80.1% stake in the troubled American auto group in May to Cerberus Capital Management for €5.4 billion ($7.36 billion).
Daimler paid $36 billion for Chrysler in 1998 in what was billed at the time as “a marriage made in heaven.” A special shareholder meeting has been called for October, which is expected to sign off on the carmaker dropping Chrysler from its name and reverting simply to Daimler. The sale to Cerberus was completed on August 3 with what is currently known as DaimlerChrysler retaining about a 20% stake in the Detroit-based auto group. DaimlerChrysler has already forecast that the carmaker could expect to report an EBIT this year of about €8.5 billion ($11.6 billion) with the cost of breaking up the Chrysler to be principally felt in the Q3. (m&c.com)
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