Divorce Final
August 4, 2007
DaimlerChrysler said it had completed the closing for the transfer of a majority interest in its US subsidiary Chrysler Group to the New York-based private equity company.
Cerberus will take over 80.1 percent of the Chrysler Holding LLC for $7.4 billion (5.4 billion euros), while DaimlerChrysler retains a 19.9 percent interest, the company said in an announcement on Friday.
"Today marks a new chapter in the history of our company," said Dieter Zetsche, chairman of the board of management of DaimlerChrysler AG and head of the Mercedes Car Group.
A shareholders' meeting of DaimlerChrysler will decide on the change of name on Oct. 4 when the company will be known as Daimler AG.
Zetsche said details on the effects on the financial statements of DaimlerChrysler will be explained on Aug. 29.
Conclusion of deal
DaimlerChrysler agreed in May to sell its loss-making US division to Cerberus, but doubts had surfaced recently whether the private equity company could raise the necessary capital in view of the crisis on the US subprime lending market.
As part of the deal, Cerberus agreed to take over the pension and health care obligations of Chrysler employees.
Since the $36 billion Daimler and Chrysler merger in 1998, the company's share price has slumped and the group's market value almost halved. As a subsidiary of Cerberus, Chrysler will not be a publicly traded company of its own.
The "new Chrysler"
Chrysler LLC, as the new company will be called, said it plans to hold a celebration for employees Monday and will be rolling out a "New Chrysler" campaign through the rest of the year.
"This completion of the deal marks the beginning of a historic opportunity for us to build a company that can compete with the best in the world," Chrysler Chief Executive Tom LaSorda told Chrysler employees in an e-mail.
After initially battling to make headway in America's fiercely competitive car sector, Chrysler earnings were more recently hit by a shift in the US auto market towards smaller, more energy efficient cars following last year's jump in gas prices.
In February, DaimlerChrysler, which is the manufacturer of the luxury Mercedes Benz cars, undertook a new effort to revamp Chrysler, including slashing 13,000 jobs.