DC selling Chrysler - TC can buy a Jeep

[southtj]

http://money.cnn.com/2007/05/14/news/companies/chrysler_sale/index.htm?postversion=2007051406

NEW YORK (CNNMoney.com) -- DaimlerChrysler moved to undo the most expensive and one of the least successful mergers in auto industry history Monday as it agreed to essentially pay to dump the money-losing Chrysler unit which it paid $37 billion for nine years ago.

DaimlerChrysler announced it will sell an 80 percent stake in its U.S. brand to Cerberus Capital Management, a private equity investment firm that will pay $7.4 billion.

But the German automaker, which will be renamed simply Daimler, will not actually get most of the money that Cerberus is paying for the once proud automaker. Instead Cerberus will contribute $5 billion to the Chrysler auto operations it will now control, with just over another $1 billion going to Chrysler's finance arm.

While Daimler will receive the remaining $1.4 billion of Cerberus' capital contribution to the sale, Daimler expects to have to cover another $1.6 billion in Chrysler losses before the deal closes. So Daimler estimates that it will end up paying out about $650 million to close the deal, and that its earnings for 2007 will take a $4 billion to $5.4 billion profit hit due to charges related to the transaction.

 

[90Xjay]

what do you think the new owners are up to here?

Are they American or does it even matter at this point?

 

[cewtwo]

The splash that I've heard is What can a private equity investment firm do for (or with) a major automobile manufacturer?

Seems odd...

 

[TwistedCU]

Cerberus Capital is an American company. Former Secretary of the Treasury John Snow is their Chairman of the Board. Personally, I think it's a great investment. They got Daimler to eat the losses for this year, so it gives them a nice jump on fixing some things this fiscal year.

Hey... I don't see Chrysler/Dodge/Jeep in nearly as bad condition as it was back when Lee Iaccoca took it over. If he could turn around that miserable lot of an auto line then there is definitely hope for this one

As for me buying one, It'll be a good while before I buy another new vehicle. Even longer before I trust the company that wouldn't stand behind that '05 Unlimited.

I'd even have to pass up on a Gladiator if it came out in '08.

 

[OutOfStep]

Reminded me of a "commercial"- they have to stand behind each and every one of their vehicles because if they're in front of them and the brakes fail they'll be crushed... can't remember where that was from

 

[OutOfStep]

I predict that it will be like when AMF bought Harley-Davidson

 

[Utah_jeepster]

I predict that it will be like when AMF bought Harley-Davidson

And we all know what happened then....I can still picture the oil stained cardboard cut outs below each brand new AMF "hardley" Davidsons

 

[JeepMonkey]

I think the good thing is that since Daimler is taking such a bite on the price they paid vs. the price they sold it for means that all the money I gave them to own my Jeep ended up going up in smoke. It's not in my pocket anymore and that's sad, but at least it's not in their pocket either!

 

[redrooster]

Frankly, I just don't understand how you can have losses in the billions. When you are talking about that much money, it's not like it's going to sneak up on you one quarter in surprise. If I saw that kind of loss coming, I would be doing everything possible to mitigate including dumping product lines (Commander and Compass especially) and closing plants.
This is what they get for stopping production of the Cherokee a few years ago.

 

[mud4feet]

Frankly, I just don't understand how you can have losses in the billions. When you are talking about that much money, it's not like it's going to sneak up on you one quarter in surprise. If I saw that kind of loss coming, I would be doing everything possible to mitigate including dumping product lines (Commander and Compass especially) and closing plants.
This is what they get for stopping production of the Cherokee a few years ago.

:agree:

I'm no business man, but just how many zeros to the right is that???? Let's see, a million is 9 zeros, so I guess a billion is about 12 - way beyond my comprehension!!!! From what I've heard this "capital fund" that's buying them is one of these entities that strips the purchased company of all fat and sells them off a a big profit - based upon the "valuable" assets (the Jeep line!!!!!!!!). All we can hope for is that the Jeep line will be purchased by some mega-corporation that will continue the tradition.........after all, it's not a first.....i.e. Willys/Kaiser/Amc/Daimler-Chrysler.

 

[currupt4130]

My money is on Hyundai to buy Chrysler.

 

[TwistedCU]

My money is on Hyundai to buy Chrysler.

How about Suzuki? They already make 4WD SWB convertibles... they could just slap a Jeep label on those :shock:

 

[redrooster]

A trillion is 12 zeroes. A billion is 1,000,000,000.
If it were Asians, a logical buyer would be Honda. They have the lightest marketshare of SUV's among them. For them, this would be SUV bliss, though it is doubtful they would consider it. I just don't see a Japanese company buying Jeep. Korean maybe.