Sale of Chrysler

Earlier this month, Cerberus Capital Management LP acquired an 80.1% stake in Chrysler. As part of the deal with Daimler, Cerberus will take over pension and health care costs allowing DaimlerChrysler to get out of $19 billion in retirement liabilities. Cerberus hopes to return Chrysler to profitability again starting off by shedding 13,000 jobs and shutting down a non-profitable factory in Delaware. DaimlerChrysler AG, with approval from its shareholders will be renamed Daimler AG.

From Wikipedia

Chrysler LLC is an American automobile manufacturer that has been producing automobiles since 1925 and from 1914 under the Dodge name. From 1998 to 2007, Chrysler and its subsidiaries were part of the German based DaimlerChrysler (now Daimler AG) after an arduous deal falsely sold to stakeholders^[1] as a "Merger of Equals" in 1998.^[2] Prior to 1998, Chrysler Corporation traded under the "C" symbol on the NYSE. Under DaimlerChrysler, the company was named "DaimlerChrysler Motors Company LLC", with its U.S. operations generally referred to as the "Chrysler Group".

On May 14, 2007 DaimlerChrysler AG announced the sale of 80.1% of Chrysler Group to American equity firm Cerberus Capital Management, L.P., although Daimler continues to hold a 19.9% stake. Chrysler LLC is the new name.^[3] The deal was finalized on August 3, 2007.^[4]

After the announcement of the spin-off to Cerberus, the Chrysler LLC, or "The New Chrysler", unveiled a new company logo on August 6, 2007 and launched its new website with a variation of the previously used Pentastar logo. Robert Nardelli also became Chairman and CEO of Chrysler under the ownership of Cerberus. Chrysler is now the largest private automaker in North America.

Government loan guarantees

A Dodge Aries. The "K-cars" are generally credited with saving Chrysler from bankruptcy.

The Chrysler Corporation on September 7, 1979 petitioned the United States government for US$1.5 billion in loan guarantees to avoid bankruptcy. At the same time former Ford executive Lee Iacocca was brought in as CEO. He proved to be a capable public spokesman, appearing in advertisements to advise customers that "If you find a better car, buy it." He would also provide a rallying point for Japan-bashing and instilling pride in American products. His book Talking Straight was a fitting reply to Akio Morita's Made in Japan. Congress reluctantly passed the "Chrysler Corporation Loan Guarantee Act of 1979" (Public Law 96-185) on December 20, 1979 (signed into law by President Jimmy Carter on January 7, 1980), prodded by Chrysler workers and dealers in every congressional district who feared the loss of their livelihoods. The military then bought thousands of Dodge pickup trucks which entered military service as the CUCV^{[citation needed]}. With such help and a few innovative cars (such as the K-car platform), especially the invention of the minivan concept, Chrysler avoided bankruptcy and slowly recovered.

In February 1982 Chrysler announced the sale of Chrysler Defense Inc., its profitable defense subsidiary to General Dynamics for $348.5 million. The sale was completed in March 1982 for the revised figure of $336.1 million.^[7]

By the early 1980s, the loans were being repaid at a brisk pace and new models based on the K-car platform were selling well. A joint venture with Mitsubishi called Diamond Star Motors strengthened the company's hand in the small car market. Chrysler acquired AMC in 1987, primarily for its Jeep brand, although the failing Eagle Premier would be the basis for the Chrysler LH platform sedans. This bolstered the firm, although Chrysler was still the weakest of the Big Three. In the early 1990s, Chrysler made its first steps back into Europe, setting up car production in Austria, and beginning right hand drive manufacture of certain Jeep models in a 1993 return to the UK market. The continuing popularity of Jeep, bold new models for the domestic market such as the Dodge Ram pickup, Dodge Viper (badged as "Chrysler Viper" in Europe) sports car, and Plymouth Prowler hot rod, and new "cab forward" front-wheel drive sedans put the company in a strong position as the decade waned.

[edit] Acquisition by Daimler-Benz

Dodge Intrepid.

In 1998 Daimler-Benz purchased Chrysler, forming DaimlerChrysler AG. Chrysler Corporation then was legally renamed DaimlerChrysler Motors Company LLC, while its total operations began doing business as Chrysler Group. This was initially declared to be a merger of equals,^[8] but it quickly became evident that Daimler-Benz was the dominant partner. Chrysler went into another of its financial tailspins soon after the merger, greatly depressing the stock price of the merged firm and causing alarm at headquarters in Germany, which sent CEO Dieter Zetsche to take charge. The Plymouth brand was phased out in 2001, and plans for cost cutting by sharing of platforms and components began. The strongly Mercedes-influenced Chrysler Crossfire was one of the first results of this program. A return to rear-wheel drive was announced, and in 2004 a new Chrysler 300 using this technology and a new Hemi V8 appeared and was successful. Financial performance began to improve, with Chrysler providing a significant share of DaimlerChrysler profits due to restructuring efforts at the Mercedes Car Group. The partnership with Mitsubishi was dissolved as DaimlerChrysler divested its stake in the firm due to diving Mitsubishi profits and sales worldwide.

[edit] Sale

Chrysler Sebring.

According to the April 2007 issue of Der Spiegel, CEO Dieter Zetsche expressed a desire to dismantle Chrysler and sell off the majority stake and at the same time keep Chrysler "dependent" upon Mercedes-Benz after the sale.^[9]

On April 4, 2007 Dieter Zetsche said that the company was negotiating the sale of Chrysler, which was rumored for weeks before the announcement. One day after, investor Kirk Kerkorian placed a 4.5 billion dollar bid for Chrysler. On 12 April Magna International of Canada announced it was searching for partners to place a bid for Chrysler. Magna's offer was outbid.

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DaimlerChrysler to sell Chrysler Group for $7.4 Billion

On May 14, 2007 DaimlerChrysler AG announced that it would sell 80.1% of its stake in the Chrysler Group to Cerberus Capital Management for $7.4 Billion. After the transaction was to complete, Chrysler Group (DaimlerChrysler Corporation) would officially become Chrysler Holding LLC (changed to Chrysler LLC upon completion of the sale), with two subsidiaries - Chrysler Motors LLC (new name of DaimlerChrysler Motors Company), which will produce Chrysler/Dodge/Jeep vehicles, and Chrysler Financial Services LLC (new name of DaimlerChrysler Financial Services Americas LLC), which will take over the current operations of Chrysler Financial. DaimlerChrysler AG plans to change its name to Daimler AG pending shareholder approval sometime this fall.^[10] On August 7th, 2007 Chrysler named Robert L. Nardelli Chief Executive.^[11] On August 28, 2007, Chrysler hired Deborah Meyer, former Vice-President of Marketing at Lexus, to become Vice-President and Chief Marketing Officer for their marketing team.^[12] On September 6th, 2007 Chrysler named James Press, formerly Toyota's highest ranking American executive, as their co-president.^[13] A day later, Chrysler named Phil Murtaugh, formerly the Vice-President of Shanghai Automotive Industry Corporation, as CEO of their Asian Operations.^[14]

On October 10, 2007 the new company experienced its first labor dispute. A strike deadline of 11 a.m. had been set by the United Auto Workers (UAW) union leadership pending successful negotiation of a new contract patterned after the pact with GM. As the talks progressed past the deadline, most Chrysler unionized workers walked off their jobs. With media speculation about the impact of a long strike, an impromptu announcement after 5 p.m. the same day indicated that a tentative agreement had been reached, thus ending the walkout after just over six hours