Cerberus nears buyout of Chrysler
WASHINGTON – DaimlerChrysler is closing in on the sale of Chrysler to the private financial firm Cerberus Capital Management in a deal expected to be announced as early as today. The sale would unravel a megamerger of the 1990s and highlights the growing influence of private equity on American business.
Dieter Zetsche, DaimlerChrysler chairman, put Chrysler on the block in April, opening a high-stakes bidding war for the third-largest U.S. automaker. Chrysler is the kind of company that private-equity firms like to target: a distressed operation with strong cash flow and potential for turnaround.
Any agreement that places Chrysler in the hands of private equity is likely to unsettle Chrysler’s U.S. labor unions, which have repeatedly denounced private-equity ownership.
Union leaders at the Canadian Auto Workers and the United Auto Workers, who were unavailable for comment late Sunday, have said in the past that they fear plant closings and job cuts on top of those sought in restructuring attempts over the past decade at Chrysler.
Under preliminary terms, a new company will be set up that will be 80 percent owned by Cerberus, while Daimler will retain a 20 percent stake, according to sources familiar with the deal who spoke on condition of anonymity because negotiations were still under way. The new company would inherit Chrysler’s $18 billion debt.