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DaimlerChrysler sells Chrysler to US private equity firm

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Berlin, May 14 (Xinhua) -- DaimlerChrysler confirmed on Monday that it is selling the majority stake in its money-losing U.S. arm Chrysler Group to the U.S. private equity firm Cerberus, ending a nine-year transatlantic marriage between the two car giants.


Under the deal announced by DaimlerChrysler chief Dieter Zetsche, Cerberus would pay 7.4 billion U.S. dollars for an 80.1 percent stake in Chrysler, which will become the first of the big Detroit automakers to be privately owned.


Daimler, which acquired Chrysler in 1998 for 36 billion dollars in a bold move to try to become a truly global player, will retain a 19.9 percent stake in the U.S. car maker.


"We're confident that we've found the solution that will create the greatest overall value, both for Daimler and Chrysler," said Zetsche while announcing the deal. "With this transaction, we have created the right conditions for a new start for Chrysler and Daimler."


The deal is expected to be finalized in the third quarter, said DaimlerChrysler. The Germany-based firm would change its name to Daimler AG upon approval by shareholders.


Originally touted as "a marriage made in heaven," the merger of Daimler and Chrysler in May 1998 has never resulted in the savings or market power once envisioned.


Despite massive cost-cutting efforts, Chrysler, which depend heavily on sales of SUVs, pickups ad minivans, still lost 1.5 billion dollars last year and ceded market share to Japanese car makers which dominate the U.S. market on the more fuel efficient car models.


Analysts said that with the sale of Chrysler, Daimler would now be able to focus on its profitable Mercedes brands and its truck division in the future.


Meanwhile Chrysler's chief executive, Thomas W. Lasorda, said that as a private company, Chrysler will be better positioned to focus on its long-term plan for recovery, rather than just short-term results. The New-York-based Cerberus has specialized in investing in troubled companies that it felt could benefit from rigorous cost-cutting and operational controls. It has 25 billion dollars in assets under management and owns stakes in more than 50 companies, which have combined revenue of more than 60 billion dollars and more than 175,000 employees.

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This was a corporation founded in financial peril, was never ever really profitable, and has been nothing but a blood sucking leech to Diamler.


I am not saying for sure it will be desolved but it don't look good.


"A merger of equals" That was just freakin' hilarious.


The only people that bought into that were the folks at Chrysler themselves. In a little more than 80 years they haven't been able to engineer their way out of a wet paper bag.


The only thing that has managed to keep them alive this long is the occasional creation of niche vehicles, which then other mfgs greatly improve upon, leaving Chrysler management standing around with their thumbs in their ass asking what the hell happened.


I think the vultures are circling for the last time.

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