• May 14, 2007
We've already reported on the forthcoming sale of Chrysler to Cerberus Capital Management, but until now, all the cited reports were mum on price. The New York Times has that figure and it's a cool $7.4 billion. A press conference to announce the deal is expected in about three hours, at 8 AM EST.

According to the NYT, Cerberus will take an 80.1-percent chunk of Chrysler, while DCX holds on to the remaining 19.9-percent. That fifth of the company will be held under a new company called Chrysler Holding LLC and privately owned – a first for a Detroit automaker. Additionally, Chrysler will be bought as a debt-free entity, with the new owners only being responsible for the $18 billion in health care liabilities and pension.

DCX's shareholders and the board have approved the sale, with UAW head Ron Gettelfinger saying that this is in the "best interests of our UAW members, the Chrysler group and Daimler." That last part, "Daimler" is only part of the company's new name; it will now simply be known as Daimler AG.

Details of the financial breakdown include Cerberus' investment of $5 billion in the automaker itself, while a little over $1 billion will go towards Chrysler's financial wing. $1.45 billion will go to Daimler directly, although its expected that the now freed automaker will reinvest $600 million back into Chrysler.

The entire deal is expected to close by the third quarter of this year. In the meantime, watch this space for more.

[Source: New York Times]


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  • 34 Comments
      • 7 Years Ago
      Also will Daimler's 19.9% be held by them as a long term passive holding? I am reminded that the Chrysler 300C and the range that followed has been a very good succes. But the secret here was they used an enlarged Mercedes 300E Platform, transmission and suspension. It seems that Mercedes hated doing this and commented to the effect "never again". Thus will Daimler/Mercedes continue to allow some of their technology to be used in this fashion, or is Chrysler now technologically fully divorced?
      • 7 Years Ago
      Sorry if i was not too clear, my point was not that mercedes had better or worse SUVs, but that they already had them, and probably could have come up with something on their own to combat Grand Cherokee, which was really THE name back then, if they wanted to go into that size and price range. I agree with you that they decided to just buy the whole thing, Jeep brand image and customer base and everything, but they also had the intention to use some economy of scale and have a combined competitive vehicle range in every market segment imaginable. And definitely they are not calling it a success now, but the fault for this is not Daimlers, at least not entirely. All 3 got hit by the shift in the market, asians, and the fuel prices, but Chrysler was the one that just stood there and did nothing. The german guys are saying that most of their efforts to change things were met with great opposition by the unions. Maybe they are washing their hands... but i have to say again that the idea voiced here, that they bought Chrysler just to take Jeep and ruin everything else, so as to eliminate competition, is a bit ridiculous, Mercedes is a premium brand, competing against BMW, Lexus, Audi, Infiniti, etc. Also somebody mentioned that they are getting 7 billion now, plus 15 billion that Crysler brought them over the years, and are now walkin away with 21 billion in their pockets. I already quoted that they are actually paying 600 mil debts, and it is kind of unbelievable that Mercedes would steal almost 2 billion every year and write it out as a loss to Chrysler, not to mention it would probably be illegal. GM and Ford have hard times turning profits, why would Chrysler have been this amazingly profitable company?
      • 7 Years Ago
      I think someone is trying to construe my words to mean that I think that the Grand Cherokee is a better vehicle than the SUVs Mercedes offered at the time. I was not implying any such thing.

      The Grand Cherokee was, at the time, a far better seller, and likely more profitable.

      Mercedes wanted in on the SUV market. Buying an established name in the market was considered a good way to do it. No, it didn't work out, but that just underscores how Mercedes make mistakes here.

      To those who would say the Grand Cherokee (or Jeep name) wasn't worth US$30B, I would say, what in Chrysler was? Did they want in on that sweet, sweet Concorde/LHS Cab Forward action? I would suggest no.

      Mercedes wanted a leg up into the broad SUV market, and to a lesser extent, the broad affordable car market in the US. So they tried to buy their way in, and they bobbled it badly.
      • 7 Years Ago
      Val, the big conspiracy is that before Daimler, Chrysler had a huge stock pile of cash, after Daimler, they dont. Daimler also would not let them build the cars they wanted to build. Look up the Chrysler ME-412, Daimler wouldn't let them build it because it was a better car then the mercedes slr mclaren and would have been half the price. Simple as that.
      • 7 Years Ago
      Chrysler was in a hole when Daimler bought it. There was nothing to steal and in fact cost money to maintain. Chrysler has been handed loans & grants from governments and still could stand on their own two feet. Daimler could accept continuous loss's with the company and sold it to someone who will tear it apart and sell only bits & pieces. "The Money" went with the deal with Daimler and obviously wasn't enough to keep Chrysler afloat or they wouldn't have been sold to begin with. Be realistic, TheRealist.

      Posted at 10:10PM on May 14th 2007 by Barney

      Barney, your ignorance of historical fact is appalling. When Damiler took over Chrylser it was the most profitable car caompany on the planet (a title that Porsche holds now). You sound like you entered a time capsule in the 1981 when the US government gauaranteed loans by private banks to Chrylser and didn't come out till now. If Chrysler was in such a hole and has been perpetually in trouble for all of its recent existence how did it ever buy Lamborghini? How did it ever buy Gulfstream? How did it ever buy AMC/JEEP for 2.7 billion? Obviously it had some money. And when Daimler bought it they had just had their most profitiable year ever. You should at least try to look up the facts on the internet before posting.

      Chrysler had 8 to 10 billion in cash reserves saved for when the next recession would come so that they could keep on developing vehicles without having to mortgage the company. - IF - Chrylser had remained independent and - IF - they had the exact same losses (they would have done much better in my opinion, but we'll never know), the cash reserves would have covered all the losses to date and Chrylser would be in the black today. NO ONE knows what happened to that money. But this has been the MO for Daimler for years (look at what they did to Fokker and Freightliner). Don't even get me started about the royalties that Daimler charged for old parts, consulting fees by German engineers while American engineers helping Daimler in such things as munufacturing efficiency and flexibility were paid by Chrylser and couldn't charge Daimler, and the moving of Chrylser Financial over to the German side of the ledger so that the profits that they made every year were NOT reported as part of Chrysler group (what major automaker doesn't have it's own finance arm to make a profit from?), and it's a wonder that the company isn't more screwed up than it is.

      If you want a clue to just how clueless Daimler has been, look no further than Joe Eberhardt, VP of sales for Chrylser who re-created the infamous "sales bank", building cars no one had ordered. He was a Daimler executive, not a Chrylser executive.

      The real reason Daimler bought Chrylser was their previous aquisitions had gone bust and they were afraid of being bought by someone else. Now after waisting billions they are right back where they started and some in finance community have speculated they may be a takeover target themselves. Personally I wouldn't touch them with 20 foot pole. There cars are not even that reliable.
      • 7 Years Ago
      So now that "DCX" is dead as a way to refer to Chrysler cars, we need a new term to roll of the tongue like GM and FoMoCo.

      Since the new little brother in Auburn Hills (New York?) is named "Chrysler Holding LLC," I think we need to work "Ho" into the name.

      1st attempt: CryHoLc - pronounced Cry-Hoe-Lick

      I'm sure someone else can do better.
      • 7 Years Ago
      Strangely, I have to wonder if the purchase of Chrysler by a NY capital Mgt. firm will lead to teh resurrection of the Chrysler New Yorker nameplate!
      • 7 Years Ago
      Daimler was selling the old G-class which was manufactured in Austria, for 50 years, and in top trim it would go sa high as $100,000. A vehicle that started out as a military transport, much like Jeep. then they had the M-class, which i dint think borrows anything from Jeep. Why is everybody forgetting that Daimler paid $37 billion 9 years ago, and is now actually going to pay another $600 mil just to get rid of the damn stone on their neck. "the company announced that Chrysler losses reached $1.5 billion in 2006, even as DaimlerChrysler made $7.3 billion in the period." Thats from CNN. I have no idea why everybody is saying that Daimler bought the company, got something out of it, and dumped it. It never got anything, it was a huge mistake and loss, with all the workers' medical and social coverage. Nothing good could have been expected to come to a company that has a 3/4 share of trucks and SUVs in its sales. @#23 Do you really think that a single model called Jeep Grand Cherokee is Worth 30 billion dollars?!?
      • 7 Years Ago
      one major automotive chapter over, a new one on the horizon,..i wonder wat the next-gen chrystlers and their platforms are going to be like...a 'new' company has to come with a bang, rite?
      • 7 Years Ago
      Dear Daimler,

      First you dump Mitsu, then you dump Chrysler...y'know maybe it's YOU, and not the partners that are the problem.

      Guess what? Mitsu is profitable again. Hopefully Chrysler can right itself over the next few years and start putting some Mopar iron back on the streets.

      You guys? Learn some interpersonal skills and maybe try again with the Chinese.
      • 7 Years Ago
      Chrysler on the whole has always been the most energetic, nimble, and risk taking car company. Now that they are back in an american companys control, they have a great chance to revolutionize the auto industry. Its not just about the amount of cars a company sells. And it doen't have to be. When a car stirrs up emotions it makes people want to drive it, and own it. In todays market companys will sell less bulk cars and more nich vehicles. The days of the 500,000 sales for 1 vehicle are over. Chrysler must do the following in order to lead the auto industry:
      1 make an affordable compact car, with great gas mileage, great quality, and great styling.
      2 sell more cars in emerging markets like China, Russia, & India.
      3 Get in early in the Hybrid and flex fuel market.
      4 bring back and use iconic images, such as the Hemi, Pentstar, super bee, ect.
      5 use their nimbleness to be able to hit emerging niche markets, as soon as they're emerging.
      6 Regain and use their contacts from the past (like mitsubishi) and co develop products.
      7 expand the jeep product line, but also develop a compact & subcompact jeep vehicle.
      8 Cut their retiree healthcare benefits. Without doing this one thing, there will be no chrysler! So No Chrysler = no more healthcare for any retirees.
      9 Stick with its best sellers and most profitable cars, cut or refine the others.

      Chrysler has always been the brand that most Americans feel the most emotion for, maybe because they are always the one struggling, or the smallest of the big 3. So in turn americans will continue to support chrysler till the very end. Chrysler now has a good chance to turn the tides and show what they can do. Instead of following the leader, they now have to become the leader!
      • 7 Years Ago
      #4, that was an amazing book!
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