Almost a decade has passed since the German Diamler and American Chrysler car companies merged together, becoming the “most high-profile transatlantic deal” so far to date. Thoughts of a transatlantic wonder team that would boost the car industries in both countries never reached its high ambition. With Chrysler going through several financial crises, the Germans, far across the Atlantic, had to pay the price and lay off 40.000 workers as sales of Chrysler cars plummeted. It must have been a relief then, when Cerberus, a U.S. private equity group showed interest in restoring the Chrysler company. It agreed yesterday May 14th to pay $7.4 billion for the American car company, while DaimlerChrysler, which will be renamed Daimler AG, paid $650 million to unwind its tie-up with Chrysler. Daimler will still keep a 19.9 per cent stake in Chrysler, but will no longer have any obligations or responsibilities for the over funded pension liabilities. As for Chrysler, it will be interesting to see whether a private equity group can provide the right atmosphere for Chrysler to get back on its feet. The requirements of quarterly reporting will, for instance, be eliminated, giving the leaders of Chrysler the chance “to focus all of their energy on running the business”, as John Snow, former US Treasury Secretary and chairman of Cerberus commented. Without an increased market demand for their cars, business will not start rolling at the new Chrysler Corporation no matter how much money Cerberus pours into their new acquisition. |
