Private equity firm takes over Chrysler
The private equity firm Cerberus Capital Management Friday took control of Chrysler, returning the automaker to US ownership.
Cerberus Capital Management acquired 80.1% of Chrysler from DaimlerChrysler in a $7.4 billion transaction, the Detroit Free Press said. “Today marks a new chapter in the history of our company,” said Dieter Zetsche, chairman of the board of management of DaimlerChrysler AG and head of the Mercedes Car Group. An extraordinary shareholders’ meeting of DaimlerChrysler will decide on the change of name on October 4 when the company will be known as Daimler AG. Zetsche said details on the effects on the financial statements of DaimlerChrysler will be explained on August 29.
DaimlerChrysler agreed in May to sell its loss-making US division to Cerebrus, but doubts had surfaced recently whether the private equity company could raise the necessary capital in view of the crisis on the US subprime lending market. As part of the deal, Cerebrus agreed to take over the pension and health care obligations of Chrysler employees. Since the $36 billion Daimler and Chrysler merger in 1998, the company’s share price has slumped and the group’s market value almost halved.
Chrysler, which sells cars and trucks under the Chrysler, Dodge and Jeep brands, is undergoing a major restructuring. It lost $680 million last year and $2 billion in the Q1 of this year. Tom LaSorda is expected to remain as Chrysler chief executive officer and former Chrysler Chief Operating Officer Wolfgang Bernhard is expected to become Chrysler chairman, the Free Press said. (monstersandcritics.com)
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