May 14, 2007
Cerberus Will Buy Chrysler
Daimler Chrysler will sell a controlling interest in Chrysler to private equity firm Cerberus Capital Management for $7.4 billion, reversing the 1998 "merger of equals" that proved so unsuccessful. Chrysler will become the first major U.S. car dealer owned by private equity. Cerberus will acquire 80.1% of a new company, Chrysler Holding, with Daimler Chrysler keeping the remaining 19.9%. Daimler Chrysler will transfer Chrysler as a debt-free company; Chrysler's financial obligations for its pension and health care benefits will be retained by the Chrysler companies. Cerberus will invest $5 billion in the new company and another $1.05 in Chrysler's financial arm. In addition, Daimler Chrysler will invest $600 million in Chrysler. The German company will change its name to Daimler AG. The auto workers union expressed approval of the deal. See Chrysler Group to Be Sold for $7.4 Billion; WSJ, Cerberus to Buy 80.1% Stake In Chrysler Group. Daimler Chrysler's statement is available at the WSJ website.
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