After acquiring Chrysler in 1998, Daimler Chrysler AG has cried uncle and found someone to take the loss making unit off their hands. Private Equity firm Cerberus, is paying Chrysler (note: thats Chrysler, not Daimler) $7.5 Billion to acquire 80% of it. Daimler is also chipping in approximately $650 million to get rid of $18 Billion of pension and health care liabilities.
You have to be desperate when you pay someone to take over a business! Not entirely sure what Cerberus gets out of it. I think it’ll probably be a strip and flip deal that will entail taking it public again and huge profits for Cerberus (and not the subsequent stockholders). Although, public-private-public deals like Burger King (BKC) have done pretty well (even if the initial period was a bit rocky).
I saw a news item about India introducing $3,000 cars. I don’t know if theres a market for such “toys” in the US, but I’m sure the US auto-manufacturers are worried. Plus, there’s a good chance that we’ll see a recession late this year. (33% chance of recession according to Greenspan, although to be fair his exact words were “2-1 chances we won’t see a recession” which is effectively the same thing only with a positive spin on it!)