DCX(Daimler)Sells Chrysler to Private Investor Cerberus

(Oh My) Happy Days...

SEE ALSO: Daimler Chrysler Merger, Historic Press Conference and Merger Details

Washington DC May 12, 2007; The AIADA newsletter reported that DaimlerChrysler AG ended a nine-year investment in money-losing Chrysler, handing control of the carmaker to private-equity firm Cerberus Capital Management LP and getting out from under $19 billion of retirement benefits.

Bloomberg reports that Cerberus will put up $7.4 billion with most of the money invested in Chrysler, while DaimlerChrysler will pay out a net amount of $650 million. The agreement gives Cerberus 80.1 percent of Chrysler, while the Germans, who paid $36 billion for the automaker in 1998, will retain 19.9 percent.

Chrysler lost $680 million last year and ceded market share to Toyota. Shares of DaimlerChrysler rose as much as 4.73 euros, or 7.8 percent, the biggest gain since July 2005. The stock has surged 31 percent since Feb. 13, the day before CEO Dieter Zetsche said "all options" were on the table for Chrysler's future.

United Auto Workers President Ron Gettelfinger said in the statement he supports the deal, terming the takeover "in the best interests of our UAW members, the Chrysler Group and Daimler." Pension and health care costs associated with Chrysler will be taken over by the new company.