Daimler Sells Chrysler for 5.5 billion euros

Daimler has sold 80.1 per cent of Chrysler to private equity firm Cerberus for 5.5 billion euros, far below the $36 billion price-tag the company originally paid. Daimler will retain a 19.9 per cent minority share and has committed to reinvesting 4.5 billion euros back into Chrysler, leaving Daimler with just 1 billion euros. Despite this market observers report that margins in all industrial activities (Mercedes trucks, vans and buses) are likely to rise sharply over the next few years.

Analysts at Deutsche Bank have calculated that Cerberus’ bid values Chrysler at -3.4 billion euros. They also have pointed out that the deal will have implications on GM and Ford and signal a harder line when it comes to any future labour negotiations:

“At this point, Cerberus’s strategy regarding Chrysler is highly speculative. Interestingly, it can be argued that Cerberus is mostly paying for the Chrysler finance business, and that it is paying very little for the auto business. This fact, the fact that the auto business has no debt, plus the fact that the auto and finance businesses will be placed into separate LLC’s could provide an incentive for Cerberus to take a hard line position in labour negotiations.”