Although no time frame was given, it’s expected the sale could happen within a period of weeks if both parties agree on the terms. Daimler in particular is keen to distance itself from arguably one of the worst corporate decisions in the automotive industry.
DaimlerChrysler was formed in 1998 on the basis that the deal was a ‘merger of equals’ however Chrysler’s poor performance and the company’s inability to utilize economies of scale resulted in a disconnect between the German and American arms.
Privately held equity firm Cerberus Capital Management beat out a number of bids for Chrysler and brought in new management to lead a turnaround however the slowing global economy and large investments required to develop new fuel-efficient models have proved the task difficult.
A report from the Wall Street Journal today claimed that Chrysler has lost $400 million until August this year however this is still significantly less than GM and Ford. Even the 19.9% share in Chrysler has damaged Daimler’s earnings as it lost more than $500m from its second quarter profit due to its involvement.
The corporate hoops Daimler will have to jump through to divest itself of Chrysler could be significant as the companies continue to share leasing and other finance arrangements. We’ll have to wait a few weeks to see if the reports prove accurate.
Reader Comments
Thu Sep 25 2008 6:17 AM
dcars says
It's interesting to note that before Daimler came along Chrysler made money, reliability was high and built products that met the customers needs. With in a build cycle's of time. Chrysler's reliability dropped, manufactures overall mpg went up and line up planing is awful. Now they've probably decided that they can't get any thing else out of them, they've decided to dump the rest. Good riddance.
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