Cerebus to buy Chrysler?
05-14-2007, 06:00 AM
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$7.6 Billion. Is that right? The whole corporation with all the plants, offices, etc is only worth 7.6. That is just pathetic. How much did MB buy it for initially?
05-14-2007, 06:24 AM
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Originally Posted by MDXLuvr,May 14 2007, 09:00 AM
$7.6 Billion. Is that right? The whole corporation with all the plants, offices, etc is only worth 7.6. That is just pathetic. How much did MB buy it for initially?
Andrew
05-14-2007, 07:27 AM
#14
Originally Posted by MDXLuvr,May 14 2007, 08:00 AM
$7.6 Billion. Is that right? The whole corporation with all the plants, offices, etc is only worth 7.6. That is just pathetic. How much did MB buy it for initially?
I don't care how big of a pension fund they have to pay out, it's not $30B worth!
05-14-2007, 08:36 AM
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Hmm. Doesn't seem like this is good news generally. Cerberus also now has GMAC, MCI, Delphi and other businesses notable more for their failures and problems in recent times than their successes.
If Cerberus has all these other businesses in their portfolio, how in the world are they going to be able to devote the kind of management intelligence necessary to run a massive global manufacturing organization?
If Cerberus has all these other businesses in their portfolio, how in the world are they going to be able to devote the kind of management intelligence necessary to run a massive global manufacturing organization?
05-14-2007, 09:25 AM
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Originally Posted by Slamnasty,May 14 2007, 08:36 AM
Hmm. Doesn't seem like this is good news generally. Cerberus also now has GMAC, MCI, Delphi and other businesses notable more for their failures and problems in recent times than their successes.
If Cerberus has all these other businesses in their portfolio, how in the world are they going to be able to devote the kind of management intelligence necessary to run a massive global manufacturing organization?
If Cerberus has all these other businesses in their portfolio, how in the world are they going to be able to devote the kind of management intelligence necessary to run a massive global manufacturing organization?
They are vertically integrating within the car industry and essentially taking a big bet that the American auto industry will return to profitability after a round of wage reductions and capacity/labor rationalization.
The UAW rejected Cerberus's labor agreement at Delphi, and it is likely that Cerberus will back out of the deal as a result. I understand their logic if they own GMAC, Delphi, and Chrysler, but if they lose Delphi im not sure the purchase of chrysler makes a lot of sense.
Daimler just wants rid of the $18B pension liability. They wont be getting any cash from the sale of Chrysler, but they will maintain a minority stake (~10%) of the new company. Cerberus, or the new owner of Chrysler can attempt to negotiate with the union to reduce the pension plan -- owners can threaten bankruptcy, but in a BK scenario the pension liability can take control of the company, or if things dont go well, the pension liability could get short-changed (i.e., USAir). I can assure you that Cerberus does not want to buy Chrysler and file BK -- they will try to work out a consenual deal with the unions.
Magna's bid is supported by the UAW, so if Cerberus is rejected and walks away, Chrysler is likely to go to Magna.
05-14-2007, 10:14 AM
#18
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Originally Posted by CKit,May 13 2007, 08:11 PM
Cerberus: three headed mythological guard dog
Looks like a done deal, and UAW is backing the deal too.
05-14-2007, 10:30 AM
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The deal includes Cerberus assuming at least $18 Billion in healthcare obligations and at least $29 Billion in pension obligations.
The UAW, who initially insisted that Chrysler remain with Daimler, has now actually given their blessing to the deal.
http://www.forbes.com/home/business/2007/0...14chrysler.html
Andrew
The UAW, who initially insisted that Chrysler remain with Daimler, has now actually given their blessing to the deal.
http://www.forbes.com/home/business/2007/0...14chrysler.html
Can Cerberus Save Chrysler?
Joann Muller, 05.14.07, 1:48 PM ET
Detroit -
Can Cerberus succeed where the entire American auto industry has failed? It seems to think so.
The New York-based private equity firm is making a $7.4 billion bet that by taking Chrysler out of the public eye, it can quickly reshape the company in a way that Germany's DaimlerChrysler (nyse: DCX - news - people ) could not during the nine years it controlled the American carmaker.
If Cerberus is right, and it succeeds at Chrysler--particularly in forcing union concessions on health care and other labor costs--it's a safe bet that the reforms will flow quickly to crosstown rivals General Motors (nyse: GM - news - people ) and Ford Motor (nyse: F - news - people ) as well.
"We view the purchase of a majority stake in Chrysler by Cerberus as a positive for the Big Three's labor restructuring efforts." J.P. Morgan Securities analyst Himanshu Patel wrote in a note to investors.
Cerberus is acquiring 80.1% of Chrysler, while DaimlerChrysler--soon to be renamed DaimlerAG--will retain 19.9%. Significantly, Cerberus will take over Chrysler's $18 billion in retiree health care obligations and $29 billion in pension liabilities. The transaction, announced Monday, did not include a new labor agreement, but analysts believe Cerberus would not be moving ahead without reasonable assurances from labor leaders about the scope of possible concessions. Negotiations with the United Auto Workers union on a new national contract begin this summer at all three U.S. automakers.
UAW President Ronald Gettelfinger, who serves on DaimlerChrysler's supervisory board, flew to Germany over the weekend and spent four hours meeting with Chrysler and Cerberus officials before lending his support to the deal. In recent weeks, Gettelfinger had made clear his desire that Chrysler remain part of DaimlerChrysler.
But at the meeting on Saturday, he said, "It was explained that the status quo for the Chrysler Group was no longer an option." The union eventually concluded that the transaction with Cerberus was in the best interest of its members. "We are satisfied now that the decision has been made so that our membership and management can focus on designing, engineering and manufacturing the finest-quality products for the future success of the Chrysler Group," Gettelfinger said.
Cerberus intends to keep the current management team at Chrysler, including Chief Executive Thomas LaSorda, who in February announced a recovery and transformation plan aimed at restoring profits by next year. It includes 13,000 job cuts, some cuts in production capacity and a $3 billion investment in new, more fuel-efficient power trains.
"We believe in Mr. LaSorda's plans, and we want to support those plans going forward," Cerberus Chairman John Snow told reporters during a press conference at DaimlerChrysler's headquarters in Stuttgart, Germany.
LaSorda's strategy also includes forming global alliances to help Chrysler, which is heavily dependent on truck sales in North America, to grow in developing small-car markets like China and Russia. Dieter Zetsche, chief executive of DaimlerChrysler, said that strategy will be easier to pursue when Chrysler is a stand-alone, private company. For example, some labor representatives on Chrysler's supervisory board had resisted Chrysler's plan to hook up with China's Chery Automobile to develop a low-cost mini-car for North America and Europe.
"It will be much easier for Chrysler in this case, and in many others, to look for opportunities," Zetsche said.
LaSorda said he was "very, very excited" about Cerberus' investment, noting that the deal will allow Chrysler to start fresh with a clean balance sheet. "It's a great start," he said.
Former Chrysler President Wolfgang Bernhard, who, with Zetsche, helped lead an earlier turnaround at Chrysler, has joined Cerberus and will serve as an adviser to Chrysler.
"Cerberus believes in the inherent strength of U.S. manufacturing and of the U.S. auto industry," said the company's chairman, former U.S. Treasury Secretary John Snow. "Most importantly, we believe in Chrysler."
Joann Muller, 05.14.07, 1:48 PM ET
Detroit -
Can Cerberus succeed where the entire American auto industry has failed? It seems to think so.
The New York-based private equity firm is making a $7.4 billion bet that by taking Chrysler out of the public eye, it can quickly reshape the company in a way that Germany's DaimlerChrysler (nyse: DCX - news - people ) could not during the nine years it controlled the American carmaker.
If Cerberus is right, and it succeeds at Chrysler--particularly in forcing union concessions on health care and other labor costs--it's a safe bet that the reforms will flow quickly to crosstown rivals General Motors (nyse: GM - news - people ) and Ford Motor (nyse: F - news - people ) as well.
"We view the purchase of a majority stake in Chrysler by Cerberus as a positive for the Big Three's labor restructuring efforts." J.P. Morgan Securities analyst Himanshu Patel wrote in a note to investors.
Cerberus is acquiring 80.1% of Chrysler, while DaimlerChrysler--soon to be renamed DaimlerAG--will retain 19.9%. Significantly, Cerberus will take over Chrysler's $18 billion in retiree health care obligations and $29 billion in pension liabilities. The transaction, announced Monday, did not include a new labor agreement, but analysts believe Cerberus would not be moving ahead without reasonable assurances from labor leaders about the scope of possible concessions. Negotiations with the United Auto Workers union on a new national contract begin this summer at all three U.S. automakers.
UAW President Ronald Gettelfinger, who serves on DaimlerChrysler's supervisory board, flew to Germany over the weekend and spent four hours meeting with Chrysler and Cerberus officials before lending his support to the deal. In recent weeks, Gettelfinger had made clear his desire that Chrysler remain part of DaimlerChrysler.
But at the meeting on Saturday, he said, "It was explained that the status quo for the Chrysler Group was no longer an option." The union eventually concluded that the transaction with Cerberus was in the best interest of its members. "We are satisfied now that the decision has been made so that our membership and management can focus on designing, engineering and manufacturing the finest-quality products for the future success of the Chrysler Group," Gettelfinger said.
Cerberus intends to keep the current management team at Chrysler, including Chief Executive Thomas LaSorda, who in February announced a recovery and transformation plan aimed at restoring profits by next year. It includes 13,000 job cuts, some cuts in production capacity and a $3 billion investment in new, more fuel-efficient power trains.
"We believe in Mr. LaSorda's plans, and we want to support those plans going forward," Cerberus Chairman John Snow told reporters during a press conference at DaimlerChrysler's headquarters in Stuttgart, Germany.
LaSorda's strategy also includes forming global alliances to help Chrysler, which is heavily dependent on truck sales in North America, to grow in developing small-car markets like China and Russia. Dieter Zetsche, chief executive of DaimlerChrysler, said that strategy will be easier to pursue when Chrysler is a stand-alone, private company. For example, some labor representatives on Chrysler's supervisory board had resisted Chrysler's plan to hook up with China's Chery Automobile to develop a low-cost mini-car for North America and Europe.
"It will be much easier for Chrysler in this case, and in many others, to look for opportunities," Zetsche said.
LaSorda said he was "very, very excited" about Cerberus' investment, noting that the deal will allow Chrysler to start fresh with a clean balance sheet. "It's a great start," he said.
Former Chrysler President Wolfgang Bernhard, who, with Zetsche, helped lead an earlier turnaround at Chrysler, has joined Cerberus and will serve as an adviser to Chrysler.
"Cerberus believes in the inherent strength of U.S. manufacturing and of the U.S. auto industry," said the company's chairman, former U.S. Treasury Secretary John Snow. "Most importantly, we believe in Chrysler."
05-14-2007, 11:31 AM
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Man, the company depreciates faster than their cars 
Well, hopefully they'll make better Benzos now. They have been crappy and on the bottom of the reliability list for many years now.
Well, hopefully they'll make better Benzos now. They have been crappy and on the bottom of the reliability list for many years now.