NINETY EIGHT REGENCY

Cerberus Now Set to Buy Chrysler

15 posts in this topic

Cerberus Now Set to Buy Chrysler

By Brendan Moore

05.13.2007

In a surprising reversal, Cerberus Capital Management appears to have won the bidding for Chrysler, pushing aside Magna International at the 11th hour, reports Forbes Online and The Wall Street Journal, as well as several other business publications. Magna has been the acknowledged front-runner for weeks in regard to purchasing Chrysler from Daimler, and so the news that Cerberus has emerged triumphant in the bidding process is somewhat of a stunner.

Daimler reportedly will make the public announcement tomorrow, confirming that Cerberus has won the bidding. They are expected to announce a substantial contribution to Chrysler’s $18 billion USD healthcare and pension liability as part of the deal, and that Tom LaSorda will stay on as Chrysler CEO. Cerberus advisor Wolfgang Bernhard is expected to be given a board seat in the new company.

If Cerberus pays Daimler an expected $5 billion USD for Chrysler and Daimler makes the aforementioned “substantial” contribution to Chrysler’s liability amount, the summing up is that Daimler is just making Chrysler go away at a fire-sale price. They are just giving Chrysler away to someone who can relieve them of the huge healthcare and pension liability that Chrysler brought to Daimler, and, they are paying part of that liability in order to get the deal done. By any reasonable calculations, this would have to rank as an ignominious end to one of the biggest deals of the past decade.

Daimler paid $36 billion in real cash money to acquire Chrysler in 1998.

No comment yet from the UAW, who can be assumed to be unhappy with Daimler’s choice of winner in the contest to own Chrysler.

COPYRIGHT Autosavant.net – All Rights Reserved

Edited by NINETY EIGHT REGENCY
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Well, I was kind of rooting for Frank Stronach, but I guess it's good as long as someone can turn them around.

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Why would the UAW be unhappy about this?

Seems like Daimler lost their ass on this one.

Chris

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With 14 Billion in profits last year this means that Toyota could have bought Chryselr 3 times out of just last years operating profit.

Food for thought.

Chris

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Five billion? Man, if I had Bill Gates's cash, my ass would have been itching to buy it when Daimler put it up on the auction block if I had known it would sell that cheap.
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Why would the UAW be unhappy about this?

Seems like Daimler lost their ass on this one.

Chris

UAW unhappy? Of course. Another golden goose has missed the wrecking ball.

"Daimler lost their ass on this one" has to be the understatement of the decade.

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This should be interesting..that's all I'll say.

What UAW? There will still be a UAW? :scratchchin:

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Why would the UAW be unhappy about this?

Seems like Daimler lost their ass on this one.

Chris

You just won statement of the year. :thumbsup:

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They must really have bid low!

I believe their bid was for DC to pay them $1B and GM would give them a minority stake of GM.

As for DC losing their arse, there is little way around that. But, you also have to factor in what Daimler got from Chrysler in terms of technology and things of that nature. I'm sure it doesn't make up for the billions they lost on this, but does anyone have any insights in that direction?

And in terms of the UAW being pissed, they should be. This is bad news. Cerberus has a lot of money behind them and could likely withstand a strike to get to where they want to be. Lots of leverage lost...

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They must really have bid low!

GM: "About Chrysler group... we'll take it!"

Daimler: "How much are you offering?"

GM: "...maybe you didn't hear us... we said we'll take it. Like, you give it to us... I guess we could take everyone at Daimler headquarters out for some Denny's, if you really want to play hardball."

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GM: "About Chrysler group... we'll take it!"

Daimler: "How much are you offering?"

GM: "...maybe you didn't hear us... we said we'll take it. Like, you give it to us... I guess we could take everyone at Daimler headquarters out for some Denny's, if you really want to play hardball."

:lol:

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Why would the UAW be unhappy about this?

Seems like Daimler lost their ass on this one.

Chris

Because these funds will want to turn Chrysler around quickly to make a profit. Whether Daimler lost or gained depends on how the Chrysler Group accounts look these days and how much it would cost Daimler to turn Chrysler around: maybe they ended up saving money, even when shelling a few billion USD to the pension fund. Edited by ZL-1
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