Cerberus Now Set to Buy Chrysler
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.
If Cerberus pays Daimler an expected $5 billion USD for Chrysler and Daimler makes the aforementioned “substantial” contribution to Chrysler’s liability amount, the summing up is that Daimler is just making Chrysler go away at a fire-sale price. They are just giving Chrysler away to someone who can relieve them of the huge healthcare and pension liability that Chrysler brought to Daimler, and, they are paying part of that liability in order to get the deal done. By any reasonable calculations, this would have to rank as an ignominious end to one of the biggest deals of the past decade.
Daimler paid $36 billion in real cash money to acquire Chrysler in 1998.
No comment yet from the UAW, who can be assumed to be unhappy with Daimler’s choice of winner in the contest to own Chrysler.