Cerberus\Chrysler
MBA590
University of Phoenix
Cerberus Capital Management, L.P. is one of the world's leading private investment firms. Cerberus specializes in providing both financial resources and operational expertise to help transform undervalued companies into industry leaders for long-term success and value creation. Cerberus is headquartered in New York City with affiliate and/or advisory offices in Atlanta, Chicago, Los Angeles, London, Baarn, Frankfurt, Tokyo, Osaka and Taipei. Cerberus holds controlling or significant minority interests in companies around the world. In aggregate, these companies currently generate over $100 billion in annual revenues. (cerberuscapital.com,2008)
As per Bloomberg (May 14, 2007) DaimlerChrysler AG ended its nine-year ownership of money-losing Chrysler, handing the control to private-equity firm Cerberus Capital Management LP and getting out of $19 billion in retirement liabilities.
Cerberus will invest $7.4 billion in a new venture called Chrysler Holding LLC, while DaimlerChrysler will contribute a net $650 million. Cerberus gets 80.1 percent of the company; while Daimler retains 19.9 percent.
The Chrysler Group, burdened by high pension and health costs and declining market share in the United States, was sold to Cerberus Capital Management LP. Cerberus is taking a huge risk by agreeing to take on billions of dollars in pension and retiree health care costs at Chrysler. The question is can Cerberus succeed where the entire American auto industry has failed? The New York-based private equity firm is making a $7.4 billion bet that by taking Chrysler out of the public eye, it can quickly reshape the company in a way that Germany's DaimlerChrysler could not during the nine years it controlled the American carmaker. (forbes.com,2007)
If Cerberus is right, and it succeeds at Chrysler--particularly in forcing union concessions on health care and other labor costs--it's a safe bet that the reforms will flow...