DaimlerChrysler is prepared to pay $680 million (the projected net cash outflow from the deal) in order to unload Chrysler. Private equity firm Cerberus will buy an 80.1 percent stake in the Chrysler Group from DaimlerChrysler for $7.4 billion — just over 20 percent of the price that Daimler paid for the U.S. automaker nine years ago. The deal is expected to close in the third quarter of this year.
It's the first time a major U.S. automaker will be owned by a private equity group. The company courts undervalued companies in aerospace, defense, automotive, manufacturing and other business sectors.
Chrysler will retain about $18 billion in retirement and health-care costs for current/retired employees guaranteed by existing union contracts. United Auto Workers President Ron Gettelfinger and Chrysler President Tom LaSorda have both hailed the deal as the right move to return the No. 3 automaker to profitability in 2008.