Daimler to Sell Chrysler UnitTo Private Firm for $7.4 Bln.
DaimlerChrysler will sell its Chrysler unit to a private-equity firm for $7.4 billion, abandoning a nine-year effort to make the division profitable, Bloomberg reported Monday.
Cerberus Capital Management Cerberus will buy 80.1% of the U.S. Chrysler unit, with Daimler holding the remaining 19.9 percent and a new company will be formed to be called Chrysler Holding LLC, Daimler said in a statement Monday.
The transaction is scheduled to be completed in the third quarter, Bloomberg reported.
The move will not affect Daimler unit Freightliner LLC, which includes U.S. truck making companies Freightliner, Sterling and Western Star.
Chrysler lost 500 million euros last year, about $675 million, Bloomberg said. Chief Executive Officer Dieter Zetsche failed to keep the automaker profitable after completing a reorganization he began as head of the business.
“We’re confident that we have found the solution that will create the greatest overall value, both for Daimler and Chrysler,”' Zetsche said in a statement. DaimlerChrysler will change its name to Daimler AG.
United Auto Workers President Ron Gettelfinger said he supports the deal and that the takeover was “in the best interests of our members.” The union's pension and health care costs associated with Chrysler will be taken over by the new company, Bloomberg reported.
