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.