GERMANY: Daimler discusses sale of Chrysler stake
Daimler has confirmed that it is in talks with Cerberus to sell its 19.9%
stake in former partner Chrysler. In a short official statement the company
said:
'Daimler confirms that the company is in discussions with Cerberus Capital
Management regarding the redemption of its remaining 19.9% stake in Chrysler
LLC.' Daimler's statement follows an earlier statement from Cerberus that it
had
approached Daimler about redemption of the stake. DaimlerChrysler, formed in
1998, was the biggest industrial merger of all time, but the company broke up
in May 2007 when private equity firm Cerberus purchased 80.1% of Chrysler.
Daimler AG hung on to a 19.9% stake in the company. Daimler said in July the
book
value of its stake was EUR171m, but the likely market value of the stock it
holds is unclear.
Chrysler this week surprised many with it's unveiling of three electric car
prototypes in the US. However, the company is said to be in deep financial
trouble on the back of lower US sales and a product range lacking the smaller
and
more fuel efficient vehicles that American consumers are turning to.
Legacy technology ties between the two firms are not expected to be affected
by a Daimler stake sale, at least for the foreseeable future. Cerberus said
that it expected all existing industrial relationships between Daimler and
Chrysler to continue. It's unclear at this stage why the sale of Daimler's
stake is
being discussed now. Some analysts have speculated that Cerberus may be
seeking 100% ownership prior to a sale. Daimler meanwhile, may be seeking to
cut
its Chrysler losses and make maximum use of available resources and liquidity
in
the face of ongoing cost pressures and uncertain demand prospects.
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