Cerberus Named Final Suitor In Potential Chrysler Buyout
This article is from the archive of The New York Sun before the launch of its new website in 2022. The Sun has neither altered nor updated such articles but will seek to correct any errors, mis-categorizations or other problems introduced during transfer.
DaimlerChrysler AG has picked private-equity firm Cerberus Capital Management LP as the finalist in the bidding for its Chrysler unit, three people with direct knowledge of the talks said.
The German automaker may announce its selection as early as today, the people said. Many details remain to be negotiated before an agreement is final, two of the people said.
Becoming the only finalist would vault New York-based Cerberus past the other two suitors negotiating most closely with Daimler-Chrysler: Canadian auto-parts supplier Magna International Inc. and a partnership with New York buyout firms Blackstone Group LP and Centerbridge Capital Partners LP.
“From DaimlerChrysler’s standpoint, it’s purely about who could put the most cash in their pockets the fastest,” an analyst for the Michigan Manufacturing Technology Institute in Plymouth, Mich., Dan Luria, said. “Cerberus clearly has deep pockets.”
DaimlerChrysler spokesman Han Tjan, Cerberus spokesman Peter Duda, and Magna spokeswoman Tracy Fuerst declined to comment. Centerbridge has said it won’t comment on media questions.
The chief executive officer of DaimlerChrysler, Dieter Zetsche, began seeking bids three months ago after Chrysler posted a $1.5 billion loss for 2006, since restated as a $680 million deficit. Ford Motor Co. had a $12.6 billion loss last year and General Motors Corp. lost $1.98 billion as the American automakers cede market sales and market share to Toyota Motor Corp.
Cerberus and other private-equity firms are interested in buying Auburn Hills, Mich.-based Chrysler because they expect to profit on their investment by reducing wages and paring other costs such as pension expenses.
Cerberus may have established itself as the front-runner by hiring the former chief operating officer of Chrysler, Wolfgang Bernhard, as an adviser, the president of the Canadian Auto Workers, Buzz Hargrove, said. Mr. Bernhard, who left in 2004 after four years as COO, has a strong personal relationship with Mr. Zetsche, Mr. Hargrove said.
The United Auto Workers union and CAW have objected to Chrysler’s sale to a private-equity firm, saying they fear such a buyer would try to return the company to profit by wringing savings from labor. Stuttgart, Germany-based DaimlerChrysler also has said it may decide to keep the automaker.
The Wall Street Journal reported Cerberus’s selection as the final bidder for Chrysler yesterday.
