- The Washington Times - Sunday, May 13, 2007

DETROIT (AP) — Private equity firm Cerberus Capital Management LP likely will be the winning bidder to buy Chrysler Group from DaimlerChrysler AG, and an announcement could occur as early as today, a company official said yesterday.

The potential sale comes after nearly two months of study and negotiations by several companies interested in buying DaimlerChrysler’s troubled U.S. operations.

The other companies reportedly interested in Chrysler at one time included Canadian auto-parts supplier Magna International Inc., a consortium of investors led by Blackstone Group, and General Motors Corp. Billionaire investor Kirk Kerkorian, who tried to take control of Chrysler in the 1990s, also has said he would make a bid.

Daimler-Benz AG paid $36 billion for Chrysler in 1998.

The German-American company announced Feb. 14 that all options are open for Chrysler, which lost $1.5 billion last year and is undergoing a restructuring plan that will eventually shed 13,000 jobs.

Cerberus spokesman Peter Duda in New York declined to comment.

Thomas Froehlich, a spokes-man for DaimlerChrysler in Stuttgart, Germany, said there was no official comment on whether any deal had been struck, much less the timing of any announcement.

Spokesmen at Chrysler headquarters in Auburn Hills and German Union officials, who have a strong say on the DaimlerChrysler board, also would not comment on the developments.

Analysts have said it’s likely that DaimlerChrysler would retain a minority stake in Chrysler if it is sold because the two companies are still intertwined.

The Wall Street Journal reported yesterday that Cerberus would keep Chrysler Chief Executive Tom LaSorda in place and that former Chrysler Chief Operating Officer Wolfgang Bernhard could get a board seat. Cerberus has retained Mr. Bernhard as an adviser.

The Journal, which cited people familiar with the matter, also reported that key to the deal is who picks up Chrysler’s staggering health care liability for hourly retirees. That liability is estimated at $19 billion.

Last year, General Motors Corp. sold a majority stake in its General Motors Acceptance Corp. financing arm to a consortium of investors led by Cerberus for about $14 billion.

Analysts have said buying a big stake in Chrysler could be attractive to Cerberus because it could combine GMAC operations with Chrysler Financial.

In December, Cerberus was part of a consortium of investors that said it would invest $3.4 billion in the struggling auto-parts giant Delphi Corp. in exchange for new shares of Delphi stock as it emerged from Chapter 11 bankruptcy protection.

The New York firm was to have put up half the total.

But the United Auto Workers union was reluctant to grant concessions sought by Cerberus, and Delphi said last month that Cerberus was pulling out of the group.

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