Daimler and Chrysler part company

AUBURN HILLS (WJRT) (WJRT) -- (05/14/07)--After nearly 10 years together, DaimlerChrysler AG is giving up a major stake in its United States partner and selling the Chrysler Group.

The sale comes after months of speculation. Cerberus Capital Management -- a private equity firm -- will buy Chrysler for $7.5 billion.

That's about $30 billion less than what was spent to merge Daimler and Chrysler in 1998. But accumulating debt and slow sales have forced Daimler to unload Chrysler.

Here are a few highlights of the deal: Cerberus Capital Management will acquire 80 percent of the Chrysler group. DaimlerChrysler will still have a 19.9 percent stake in Chrysler.

Names will change. Chrysler will become a private company and will be called Chrysler Holding LLC. Down the line, Daimler will eventually drop the Chrysler portion of its name.

The new Chrysler will keep its obligations for pensions and health care costs. Once the deal is sealed, the Chrysler Group will become debt free.

Chrysler Group President and CEO Tom LaSorda also says there will be no job cuts as part of the deal with Cerberus.

DaimlerChrysler Chairman Dieter Zetsche says this deal is important to both companies and Chrysler's turnaround plan.

"It's very beneficial for us that we can maintain this level of cooperation and added value through the synergies supported by this stake," he said.

"At the same time, the potential downsize to the inherit risks of this business is eliminated. So we basically have all the upside opportunity and potential without the potential downsize risk."

The deal is likely to finalized by late summer. United Auto Workers President Ron Gettelfinger released a statement saying the transaction with Cerberus is in the best interest of the UAW members.

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