Share
Explore BrainMass

Cerberus/Chrysler Situation Analysis

I could use some help. 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.

Complete your research and prepare a 750 -1,000-word paper in which you summarize issues and opportunities with respect to Cerberus' objectives.

Solution Preview

Hi,

Interesting topic! One approach too helps you with an assignment like this one is to look at research from various sources in reference to Cerberus' objectives, which you can then draw on for your final copy. This si the approach this response takes. I also attached three articles for consideration, some of which the following response is drawn from.

RESPONSE:

1. 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. Complete your research and prepare a 750 -1,000-word paper in which you summarize issues and opportunities with respect to Cerberus' objectives.

Cerberus, the major owner of Chrysler, keeps insisting that one objective is that it bought the company for the long run and that it plans some innovative changes for Chrysler. Ron Gettelfinger (May 14, 2007), from the United Auto Workers puts it this way: "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 not during the nine years it controlled the American carmaker" (objective) (http://www.forbes.com/2007/05/14/cerberus-chrysler-uaw-biz_cz_jm_0514chrysler.html). Initially, however, everyone was not convinced of the real intentions (http://money.cnn.com/2007/05/24/news/companies/pluggedin_taylor_cerberus.fortune/index.htm).

Challenging this objective, CNNMoney.com (May 21, 2007)reports: "Everyone is certain that it's blue skies ahead for Chrysler. Fortune's senior editor, Alex Taylor asks: Is there less here than meets the eye?" Along a similar vein, Taylor suggests an alternative scenario (as opposed to a new company emerging with new prospects on the horizon) and for the long haul). Taylor (2007) says it this way: "After all, ...

Solution Summary

This solution provides information about the issues and opportunities with respect to Cerberus' objectives. Supplemented with one article on the Cerberus/Chryslerd deal.

$2.19