By Dale Wickell, About.Com
DaimlerChrysler AG announced early this morning that it has sold 80.1-percent of the Chrysler – Dodge – Jeep trio to Cerberus Capital Management, a New York equity firm that specializes in turning around troubled companies. Cerberus reportedly paid $7.4 billion to obtain majority ownership, with Daimler AG retaining a 19.9-percent share. The new Cerberus unit will be called Chrysler Holding LLC. Daimler’s partial interest will allow the two entities to work together on products that already share technology.
Cerberus owns a variety of high profile companies, some within the auto industry, including National and Alamo Car Rentals, and a controlling share of GMAC financial services. Since it’s a private firm, Cerberus won’t have to answer to shareholders, something that analysts feel will give the new LLC more freedom to achieve its long-term goals, rather than churning out the short-term boosts that keep shareholders happy.
A quote from Cerberus Capital Management Chairman John Snow: “Cerberus believes in the inherent strength of U.S. manufacturing and of the U.S. auto industry. Most importantly, we believe in Chrysler.” You might recognize Mr. Snow from a previous job — Secretary of the Treasury under President George W. Bush.
Daimler’s getting about one-fifth of the amount it paid for Chrysler back in 1998. Did Cerberus get a buy, or will the group have a difficult time bringing the brand back to the position it was in after Lee Iacocca revived it in the 1980’s? Daimler’s no doubt hoping its minority interest will pay off down the road.