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.

http://www.gminsidenews.com/forums/s...ad.php?t=49275


There's always a bigger fish. So what does this mean for Chrysler and for the industry? Right off the bat, I'd say this marks a dark day for the UAW. While GM and Ford need those workers to stay in business, Cerberus is big enough and rich enough to absorb any worker unrest.

 

It will be interesting to see how this is all going to pan out.

 

Cerberus buying DCX..or anybody buying DCX means nothing but more job cuts. The white collar will be gutted, the Unions will lose more plants.

It should be noted that this is ONLY contingent on a UAW approval...which, doesn't look likely. Something Mr. Moore did not mention.

 

Josh, Chrysler is already over-gutted. Way, way over-gutted. Cerberus will probably have to do some hiring to get new product moving on a competitive schedule.

And why do you think the UAW won't approve this? I'm sure Cerberus will offer them something to save face with the membership. Have you thought about the alternative? The cat is out of the bag. DCX's shareholders and board won't like being forced to keep Chrysler at this point. What happens to the union if Daimler SHUTS DOWN Chrysler and liquidates it, blaming the union? That is a very real possibility.

 

Chrysler Financial to merge with GMAC saving lots of money (read layoffs). Cerberus owns 51% of GMAC now. Unions arent going to like it but what can they do? Its Cerberus or nothing.

 

This also means that Wolfgang comes back to Chrysler...although what I've heard is that it is not sure in what manner. He still has the two year no-compete with VDub.

http://www.thegmsource.com/index.php..._articleid=442

LaSorda is staying on as CEO, at least initially. I've also been told there's a chance Cerberus may make cuts, then sell Chrysler off brand by brand?

Interesting.

 

Because Cerberus is already playing hardball here with the UAW in regards to Delphi. They have threatened to walk away several times from a $3.4 billion offer but they haven't yet.

The Union and Cerberus do not have a working relationship at this point, and I doubt them to have a "good" relationship anytime soon.

 

I don't see Chrysler bring parted out. It has been said from almost the out set that whoever is buying into this is not purchasing a controlling intrest in Chrysler and that part of the deal is that whoever does buy in Chrysler will not gut the organization.

 

They are saying this morning that there will not be any job cuts.

 

Well, looks like Ron G (and thus the UAW) is on board.

 

CAW looks to be onboard, too.

 

You can't sell off divisions of Chrysler because they are all tied together through product development! Whoeveer told Josh that is a complete idiot. One of the reasons Daimler is keeping a 20% interest in the company is to ensure the continued co-development of platforms and drivetrains together. There are products right now planned through 2013 that Chrysler and Daimler have heavily tied together.

 

Platform sharing? The thing that got Chrysler sold is that Mercedes is not/was not willing to co develop platforms with Chrysler.

Chrysler received "hand me downs" and was expected to move the metal. The Crossfire is a direct representation of what is wrong with merger. The product moved reasonably well at first...but Mercedes did not want to update it's already dated platform for Chrysler.

I guess we'll see in 2013 if they have products that are heavily tied together.

And as an FYI...Buzz Hargrove said the deal was "very worrisome."

http://detnews.com/apps/pbcs.dll/art...TO01/705140397

Hey one positive...I guess we know that GM is not the strike target this year!

One more thing, Wolfgang is being given a position on an advisory board, not an executive board seat on Chrysler.

 

And paid Mercedes huge "licensing fees" for the privilege. It's interesting to note that technology transfers went in both directions but those fees only went in one...

 

No one is going to debate that Chrysler got the short end of the stick with the "Merger of Equals". But at the same time, I don't think you can say that the selling of 80% of Chrysler ends it's Mercedes chapter. There are infact alot of products due over the next 5 years that will be heavily tied to Daimler.

Also, there's no way to gut Chrysler's brands. They aren't going to sell off Dodge, and it's going to be next to impossible to sell off Jeep. How do you sell a brand that has it's entire lineup being made in your plants and whose entire existance is tied to the company you're buying the brand from?