Daimler sells Chrysler to Cerberus for USD 7.4bn deal

It’s official. German car behmoth DaimlerChrysler is said to have confirmed a deal to sell Chrysler, its ailing US unit, to private equity firm Cerberus for USD 7.4bn.

If reports are to be believed, the company would sell its 80.1 per cent stake in Chrysler to Cerberus in return for infuson of €5.5 billion as capital. DaimlerChrysler is reportedly shortening its name to just Daimler once the deal is completed.

Analysts have said that the sale can be considered significant as it marks the conclusion of a fierce three-way battle against Blackstone, the private equity firm, and the Canada based car parts manufacturer Magna International. It may be recalled that the US-based private equity player Cerebrus had only recently announced acquisition of GMAC Financial Services, the former General Motors finance unit.

The Chrysler story is a tale of woes. During year 2006, it had lost $1.5 billion and is currently undergoing a recovery plan. The plan is to snip 13,000 jobs in Canada and the US. The German car maker had this February said that it was mulling over all possible options for the sale of the Chrysler unit. Chrysler has suffered from the rising cost of petrol causing consumers to switch from SUVs and pickup trucks to smaller vehicles.

In the meantime, Cerberus pushed up its chances by bringing on board former Chrysler chief operating officer Wolfgang Bernhard. The battle lines were drawn when Magna International jumped into the fray with added vigor and was dubbed frontrunner. However Cerebrus seems to have won the race hands down.
 

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