Cerberus Buys Chrysler For $7.4 Billion

Cerberus said it believes in the inherent strength of U.S. manufacturing.

DaimlerChrysler announced on May 14 it had agreed to sell its U.S. arm Chrysler, nine years after Daimler acquired Chrysler for $36 billion. The group said it was selling 80.1% of the ailing U.S. auto maker to private equity firm Cerberus for a fraction of the price, 5.5 billion euros (US$7.4 billion).

DaimlerChrysler, which would change its name back to Daimler, would continue to hold a 19.9% equity interest Chrysler, the statement added.

In the statement on May 14, Zetsche said that the sale of Chrysler would enable Daimler to focus on being "the leading manufacturer of premium vehicles and a provider of premium services in every market segment we serve worldwide."

Chrysler would retain all of its financial obligations for employees' pension and healthcare benefits, meaning that the deal would not burden Daimler with any debt, it said.

The United Auto Workers or UAW, welcomed the deal. "The transaction with Cerberus is in the best interests of our UAW members, the Chrysler Group and Daimler," said UAW President Ron Gettelfinger.

Cerberus Capital Management Chairman John Snow said: "Cerberus believes in the inherent strength of U.S. manufacturing and of the U.S. auto industry. Most importantly, we believe in Chrysler."

Copyright Agence France-Presse, 2007

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