May 15, 2007
Cerberus beats out Magna for Chrysler
Detroit, Michigan – Despite rumours that had Canadian auto parts giant, Magna International and its partner Onex corporation, in the lead to buy the ailing Chrysler Group from DaimlerChrysler, a New York private equity firm, Cerberus Capital Management secretly negotiated the winning offer: U.S.$7.4 billion in return for an 80.1% equity interest in the new company, to be called Chrysler Holding LLC. DaimlerChrysler will retain a 19.9% equity interest in the new company. Significant obligations for pensions and healthcare costs will be retained by Chrysler companies.
Chrysler Holding LLC will produce and sell Chrysler, Dodge and Jeep vehicles, and operate Chrysler Financial Services LLC, which provides financial services for these vehicles in North America.
Dr. Dieter Zetsche, Chairman of the Board of Management of DaimlerChrysler AG and Head of the Mercedes Car Group said, “We’re confident that we’ve found the solution that will create the greatest overall value – both for Daimler and Chrysler.” Due to the new corporate structure, the name of DaimlerChrysler AG is to be changed to Daimler AG.
Tom LaSorda will remain President and CEO, Chrysler Corporation LLC. “We are confident that this transaction will create a standalone Chrysler that is financially stronger, with a winning combination of people, industry know-how, operational expertise and spirit of innovation that will accelerate the company’s recovery, and help us regain our position as a competitive industry leader,” said LaSorda.
Ron Gettelfinger, President of the United Autoworkers (UAW) was involved in the negotiations and has stated he is in favour of the sale, however CAW leader Buzz Hargrove was not involved in the negotiations.
John W. Snow, Chairman of Cerberus Capital Management, L.P, said, “We welcome Chrysler into the Cerberus family of companies and believe Cerberus will be a good home for Chrysler. Cerberus believes in the inherent strength of U.S. manufacturing and of the U.S. auto industry. Most importantly, we believe in Chrysler.”
Cerberus Capital Management, L.P., New York, is one of the largest private investment firms in the world, with approximately $23.5 billion under management in funds and accounts. Founded in 1992, Cerberus currently has significant investments in more than 50 companies that, in aggregate, generate more than $60 billion in annual revenues worldwide. Former Mercedes boss, Wolfgang Bernhard is an advisor to Cerberus.