MUNICH (May 14) — Private equity group Cerberus Capital Management will take control of the Chrysler group in a transaction valued at $7.45 billion.
DaimlerChrysler A.G. announced the deal, in which an affiliate of Cerberus will acquire 80.1 percent of Chrysler, while DaimlerChrysler will retain 19.9 percent.
Most of the $7.45 billion outlay from Cerberus will go directly to the future new company, Chrysler Holding L.L.C. Chrysler´s automotive business will get $5 billion, while the financial services business gets $1.05 billion. DaimlerChrysler will receive the balance of $1.35 billion. In addition, DaimlerChrysler will loan $400 million to the Chrysler automotive operation.
DaimlerChrysler will transfer the unit free of debt. Because of the cost of Chrysler´s restructuring plan, the transaction will result in a cash outflow of $1.6 billion for DaimlerChrysler. DaimlerChrysler´s net cash outflow resulting from the transaction will be $650 million.
Chrysler´s pension and health care obligations will be retained by the Chrysler companies.
Ron Gettelfinger, United Auto Workers president, said the transaction with Cerberus is in the best interests of UAW members, the Chrysler Group and Daimler.
Tom LaSorda, Chrysler Corp. CEO, said there are no new job cuts planned in connection with the transaction.
The transaction is expected to close during the third quarter of this year.