Daimler Hands Chrysler to Cerberus, Ends Nine-Year Investment - PeachParts Mercedes-Benz Forum

al76slc · #1 05-14-2007, 07:56 AM

http://www.bloomberg.com/apps/news?pid=20601087&sid=af3dBz1lPZ2U&refer=home

What a disaster!

Anybody see anything positive that came out of it?

Also Chrysler worth only $7.4B (for 80%) so only $9.25B for 100%??? Seems cheap.

Wall Street Journal etc. (Dow Jones) worth $5B to Murdoch.

raymr · #2 05-14-2007, 08:23 AM

I always thought it was a marriage made in hell. The cars that came out of it will go down as curiousities, like Nash-Healey or AC-Cobra. Billions of dollars evaporated, where did it all go?

How does a german even pronounce Chrysler?

Kuan · #3 05-14-2007, 08:40 AM

Quote:

Originally Posted by raymr

How does a german even pronounce Chrysler?

Bahng-Krupt-zie

t walgamuth · #4 05-14-2007, 08:43 AM

yikes!

i am very dejected about it.

i had high hopes for chrysler under mercedes ownership. i have bought three new chrysler products since mercedes took over which i probably would not have otherwise.

now they are stepchildren.

disappointed. i thought mercedes would have stayed with it.

tom w

420SEL · #5 05-14-2007, 09:12 AM

This is from the marketwatch.com

"But, this is the perplexing thing. If private equity firms and a Canadian car parts company think they can fix Chrysler, and may even be willing to take on a huge liability for the privilege, what is wrong with the people who run Daimler? DCX management could certainly claim to be in the top tier of auto executives in the world. Daimler has the financial resources to attempt a fix at its US arm, and, it has fixed it once before.

The answer is probably that Chrysler has almost no sales outside the US, and Daimler thinks this is essential to its overall future. Overseas sales have certainly been critical to GM's (GM) and Ford's (F) abilities to remain viable, and they are at the heart of Toyota's (TM) strategy to keep growing.

Ninety percent of Chrysler's cars are sold in North America. It sold only 207,000 cars overseas last year. Fifty-five percent of GM's sales were outside the US.

Daimler's Mercedes unit is an international brand. Chrysler is not. Going forward, DCX is not willing to have that many eggs in one market basket.

Douglas A. McIntyre"

jcyuhn · #6 05-14-2007, 10:24 AM

An additional challenge is the UAW refused to negotiate cost concessions on medical insurance with DCX. Both GM & Ford won concessions in the last year or two. Despite Chrysler bleeding red ink, the UAW expected DCX to fund the operating losses out of profits earned by Mercedes and other divisions. One more reason why DCX management would rather pitch in the towel than attempt to fix the problem. It'll be interesting to see what a private equity group does with control of a big-3 automaker. Chrysler employees had best fasten their seatbelts!

- JimY

G-Benz · #7 05-14-2007, 10:24 AM

Quote:

Originally Posted by raymr

...The cars that came out of it will go down as curiousities, like Nash-Healey or AC-Cobra...

...and don't forget Harley-Davidson...the AMF years!

yal · #8 05-14-2007, 12:48 PM

This is not going to be pretty.

I think the Daimler shareholders just wanted out whatever the cost.
Here are some quotes from the last shareholder meeting some weeks ago...

"For nine years you have been sitting on this scrapheap called Chrysler. Nobody has learned anything. To call this a sale is a euphemism. If you pay for the garbage man to empty the dustbin, does that mean you have sold something to the garbage man?" -- Ekkehard Wenger, author of an unsuccessful motion to change the company name back to Daimler-Benz

"Since this so-called marriage made in heaven, we have seen a drop in the share price by 30 percent. Should there be a divorce, we would be very happy." -- Henning Gebhardt, a Frankfurt fund manager

"The company is split between an American mentality and a German way of thinking. Germans care about quality and technical expertise. Americans only want money. They don't care about the craftsmanship of the product. This is an arrangement that must end." -- Georg Nuemeier, a shareholder from Burgau, Germany

"Chrysler is the worst problem in the group. You are underestimating how poisonous this pill can be for your company." -- Hans-Richard Schmitz, a lawyer representing a German shareholders group

Well they got their wish

Zeus · #9 05-14-2007, 01:08 PM

Good move. Now get back to work concentrating on making fantastic Mercedes.

BENZ-LGB · #10 05-14-2007, 01:11 PM

Quote:

Originally Posted by jcyuhn

An additional challenge is the UAW refused to negotiate cost concessions on medical insurance with DCX. Both GM & Ford won concessions in the last year or two. Despite Chrysler bleeding red ink, the UAW expected DCX to fund the operating losses out of profits earned by Mercedes and other divisions. One more reason why DCX management would rather pitch in the towel than attempt to fix the problem. It'll be interesting to see what a private equity group does with control of a big-3 automaker. Chrysler employees had best fasten their seatbelts!

- JimY

This is probably a big factor.

You can't have good money chasing after bad money.

Too bad the unions wouldn't chip in.

I really like the products that Chrysler has been putting out over the last few years. The Dodge Charger, with the Hemi engine, seems to be a very exciting car. So is the Magnum wagon. I even saw a new Sebring and I actually liked it.

Too bad.

BENZ-LGB · #11 05-14-2007, 01:15 PM

Not a very reassuring name for Chrysler's employees:

In Greek mythology, Cerberus or Kerberos (Greek Κέρβερος, Kerberos, "demon of the pit") was the hound of Hades, a monstrous three-headed dog (sometimes said to have 50 or 100 heads) with a snake for a tail; he was also seen with a dragon's tail and serpentine mane.

Cerberus guarded the gate to Hades and ensured that spirits of the dead could enter, but none could exit (additionally no living person was to come into Hades). Among his siblings are; his sister, Chimera and his brother, Hydra. He is the offspring of Echidna and Typhon.

He was overcome several times:

Hercules' final labour was to capture Cerberus, which he did by wrestling it into submission. Orpheus used his musical skills to lull Cerberus to sleep.
Hermes put him to sleep with water from the river Lethe. In Roman mythology, The Sybil of Cumae lulled Cerberus to sleep with drugged honeycakes in order to permit Aeneas fuller entry to the underworld.
In a Greek tale, Psyche also lulled Cerberus to sleep with drugged honeycakes. In the Greek Oracle of the Dead at Cumae in southern Italy, the recently excavated subterranean shrine was found to contain chains fixed to the wall for three large dogs before the entrance to the shrine of Hades and Persephone. The three dogs would have represented Cerberus in this ancient temple.

From Wikipedia

al76slc · #12 05-14-2007, 01:26 PM

Quote:

Originally Posted by BENZ-LGB

The three dogs would have represented Cerberus in this ancient temple.[/I][/B]

From Wikipedia

One of the dogs would represent the K cars....

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

So Daimler receives a negative $650M in selling Chrysler.

Hmmm... My son is learning negative numbers in 6th grade. I'll have to ask him what this means.

BENZ-LGB · #13 05-14-2007, 01:30 PM

Selling at a loss...that can't be good for the bottom line. Unless, of course, Daimler was able to foresee moutning future losses that would make the $650M loss seem like a bargain.

And there are always tax breaks when you sell a business at a loss.

I am sure that Daimler has some pretty smart boys and girls who figured all of this out long before the deal with Cerberus was struck.

AustinsCE · #14 05-14-2007, 01:33 PM

I thought Chrysler was doing well, I see thousands of them everywhere. Every wannabe gangsta' has like 2 300Cs with dubs and a grill, yo.

stcbenz83 · #15 05-14-2007, 02:46 PM

WOW, this comes as a surprise to me. I have always loved older Mercedes because they are actually Mercedes. Ever since the merger between the two companies, i have looked sideways at the newer Mercedes to look at the BMW line up. But this split has made me very excited to see how the newer Mercedes quality improves. As it stand now, newer Mercedes are not "reliable" as i have read some where or another.