You may recall that Daimler maintained a minority share of Chrysler when it sold the American automaker to Cerberus. About a year ago, ChryCo’s German “partner” (and author of the abortive DaimlerChrysler “merger of equals”) valued its 19.9 percent Chrysler stake at $2.2b. At the end of June, the number slid to a scarecely creditable $268m. And now The Detroit Free Press says Daimler believes that its ChyrCo position is without any financial value whatsoever. Which should make Cerberus’ negotiating position re: buying back that stake so it can “sell” the whole kit and caboodle to GM, or just C7 Chrysler, a little easier. But in fact, it’s important to note that Chrysler has long-term liabilities to its unionized workforce, and lots of ‘um. Billions of dollars worth. If/when Chrysler goes Tango Uniform, you can bet the United Auto Workers, jilted suppliers and other debtors will come knocking on Daimler’s door. So I’m thinking Daimler may have to pay Cerberus to rid themselves of this troublesome man. Watch this space.
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Will heads roll in Stuttgart over this? “Vy didn’t ve sell ALL uf zis money-pit?!”
I could easily see Daimler having to pay to get rid of their remaining %. Lots of billions in future VEBA payments they are partially responsible for and would love to duck I imagine.
What the heck, I’ll take it.
I’ll up the ante and give Daimler a dollar three ninety eight for 19.9% of Chrysler LLC.
Do we have a bid of four dollars eleventy eleven centavos?
PS anybody got a calculator? What’s 19.9% of $11 billion? (Yes this does mean I’m asking if the $11 billion “is real”).
I just saw another report that has Chrysler announcing an additional 25% reduction in salary workforce. Yikes. I am pretty sure that we have reached the “end of the beginning” and have moved straight into the “beginning of the end”.
Can you imagine the morale at Chrysler right now?
I thought Diamler kept that 20% stake in Chrysler because of some factories or something that they funded that were due to open. Joint deveopment of some part, transmission or engines or something. Can someone with knowledge of this “Robert” clarify what I am trying to say. Those are assets taht have real value, why would their stake be woth nothing now.
$268million(20%)x5 means they think Chrysler is worth $1.34 billion, yikes that is nothing. And I’m sure they are worth less by now.
I don’t believe Daimler was in it for the money to begin with, concerning those 20%. It’s all about control. They wanted to be assured Cerberus wouldn’t make them liable for some shit Cerberus could come up with if strapped for cash. Those 80% were the money, the rest is control, and any money on top of that is just a benefit.
There were measurable and non-measurable assets. The hybrid transmission developed with GM and BMW is very tangible. M-B could use it in product line along with Chrysler (RAM hybrids in plan for 2009). It would be impossible to separate ownership levels in this venture. Also, auto domestic manufacturers are entitled to fruit of scientific research conducted or financed by US government. Chrysler(Dodge) manufactures and sells M-B van in US. Something has to trickle back to Stuttgart. Also, it is beneficial to have secondary market for less then current technology.
I’ve got a bag filled with several hundred thousand Yugoslavian Dinars. I’ll trade that for Cerberus’ stake in Chrysler.
Daimler should just sell their 20% Chrysler stake on eBay, starting at 1$. It’s a proven fact that eBay users on average overpay for the items they buy. They’d sure get a couple of thousand Dollars…hey, better than nothing.
tom:
Good idea about e-bay. Boot-em Bob could get on a few minutes before closing bid and run the price up in the last minute fenzy.
I have a tin full of Portuguese escudo’s; French, Belgian & German Francs…probably was worth $10 before the euro, I’ll chip that in
I’m officially upping my bid to one old Austro Hungarian coin valued at about $15 united states, that my parents gave me for my “coin collection”.
Top that.
Since Cerberus has been wanting to buy that 20% from Daimler, and since Daimler says it’s worth Nada, I think Cerberus should go ahead and pay Daimler what Daimler thinks it’s worth… :)
On the other hand, if that 20% really IS a liability for Daimler, I hope Cerberus milks them for every dime they can get.
I have a tin full of Portuguese escudo’s; French, Belgian & German Francs…probably was worth $10 before the euro
I thought the local currecies were still in circulation, has the Euro overtaken all currencies in europe? Can’t wait until we get the Amero.
I found a dime in a parking lot yesterday, I would be willing to toss that into the pot for ownership.
For some reason this whole thing reminds me of the Simpsons episode where Mr. Burns sells the nuclear plant to the Germans for a huge pile of money, only to buy it back later for peanuts when the Germans realize they were suckered…
Still, I’ll chip in my lunch money. As for liabilities, well, we can always file for bankruptcy and get rid of those UAW contracts.
Maybe TTAC should buy the company?
I would love, Love, LOVE to see Chrysler file chapter 11. If they’d just go ahead and do it I think they would be the best positioned domestic automaker within a year. As others have pointed out, I think it would force GM and Ford to file as well just to survive.
Adub:
I agree! Robert Farago for President! (of Chrysler)
A TTAC owned automaker would be interesting…and this seems like a good moment to do it, since the automaker costs less than any car produced by the same company.
When Daimler’s 20% stake is worth zero, then Cerberus 80% stake is worth four times zero, so the entire company’s value comes in at…zero. Just give them a symbolic Dollar and go C11 with Chrysler.
Great job Daimler! All it took was 10 years of you sucking Chrysler dry and shaking America’s most innovative car company of all its talent!
“America’s most innovative car company”
Is that like the tallest mountain in Kansas?
Daimler already paid Cerberus to take Chrysler off their hands. I’m sure a corporate lawyer could explain the significance of Daimler retaining a 19.9% stake rather than a 20.1% stake but I doubt very much they have any further exposure to Chrysler.