Wednesday 21st January 2009

More Hard Times for Chrysler?

Daimler looks to sell remaining stake in the struggling firm

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After yesterday's news of Chrysler handing over a 35% stake to FIAT, today we have learned that Daimler AG wants out of its 19.9% stake in the flailing American auto giant.

Daimler sold 80.1% of the Chrysler group to a private equity firm back in 2007, for a reported sum of $7.4 billion.

Now Daimler is apparently trying to divest itself of its remaining share of the firm, but is unlikely to see the same sort of valuation on the remaining equity.

This news comes as new US president Barack Obama enters office, and all eyes will be on him in his first few weeks in the top job for action to heal the troubled US car market.

[Yorkshirepud]

What exactly do Daimler make these days?

I remember they did a Jag variant years ago...what else they do?

[fatboy b]

Mercedes, Smart.

[marsdalebear]

Err.....Mercedes-Benz

[Yorkshirepud]

So where's the Daimler badge disappeared to? (

[LuS1fer]

Daimler-Benz is the main company. I believe Mercedes first entered the equation when a car was named after someone's daughter...or something. I can't even be bothered to look it up by Googling it.

Anyway, that's why Chrysler cars are based on old Merc E-Class underpinnings.

Edited by LuS1fer on Wednesday 21st January 13:02

[jmatras]

This is of academic interest to Chrysler from an ownership/control standpoint. It's a matter of Daimler finding someone to buy part of Chrysler.

(Technical matter: Chrysler isn't a corporation now so there's no stock to sell. It's something in the US called an LLC, or Limited Liability Company. LLC's have fewer restrictions on pyament of dividends and such, and were really intended more for small businesses who didn't want the strictures of a corporation but wanted to create a separate entity, rather than a sole proprietorship which is legally indistiguishable from the owner(s) personal finances.

So what Daimler owns is a stake in Chrysler's assets and I doubt they have the legal capability to demand a "withdrawal."

It would seem that if Daimler wants out they'd have to find a buyer. The only thing it means (although no small potatoes) is that it would damage Chrysler's credit rating further (if that's possible) and make it harder to get commercial credit...