Chrysler sold for $7.4 Billion

Bloomberg: Daimler to Sell Chrysler to Cerberus for $7.4 Billion reported on Dealbreaker's Opening Bell
May 14 (Bloomberg) -- DaimlerChrysler AG agreed to sell the Chrysler unit to Cerberus Capital Management LP for 5.5 billion euros ($7.4 billion), abandoning a nine-year effort to make the U.S. division profitable.
Cerberus will buy 80.1 percent of Chrysler, with Daimler holding the remaining 19.9 percent and a new company will be formed to be called Chrysler Holding LLC, the Stuttgart, Germany-based automaker said today in a statement. The transaction will be completed in the third quarter.
Cerberus purchases a company that lost 500 million euros last year and shed market share to Toyota Motor Corp. while relying too much on the stagnant North American market.

Given that Cerberus' model, like all other PE firms is to buy a company that has potential, but is drowning in failure, clean it up and turn it around, and then resell it back onto the capital markets, it's safe to assume that Cerberus has a plan.

On the other hand, the first casualty of every battle is the plan. I wonder just how much the UAW will tolerate when it comes to trimming overhead associated with labor costs?

For a better analysis than I can give, read law professor Larry Ribstein's commentary on his blog here.

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