Daimler agrees to offload 19.9% stake in Chrysler

Last October Daimler was forced to write-down the value of its remaining 19.9% stake in Chrysler to zero, yet up until now the German auto giant was still trying to sell the shares. Daimler has announced today that is has reached an agreement to unload its remaining stake in Chrysler, while also forgiving repayment of loans extended to the struggling Detroit carmaker.

The agreement, which marks the end of an 11-year partnership between the two carmakers, is estimated to be costing Daimler upwards of $700 million, though this value had already written off. The original partnership, billed as the merger of equals, lasted for nine years until Daimler, under pressure from shareholders, sold off an 80.1% stake to Cerberus Capital Management in August of 2007.

There will, however, be some remaining dealer-supplier-customer relations including limited support for certain dealer financing until the end of September.

The latest announcement improves Chrysler’s chances of forming an alliance with Fiat and should help the company receive more federal funding given that is has also reached an agreement with unions to reduce health care fund obligations and other labor costs.