Word: daimler
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...industry badly hit by the downturn. Sarkozy's loan package was announced the day Peugeot Citroen revealed 11,000 job cuts worldwide. Sales at German firms such as VW, Europe's biggest carmaker, dropped 16% in January, BMW, the world leader in luxury autos, was down 22% and Daimler AG's Mercedes unit fell 35%. No surprise that European carmakers are pleading for an immediate $19 billion cash injection from...
Chrysler is nominally controlled by Cerberus Capital Management, which acquired an 80.1% stake in the company from Daimler AG in August, 2007. Fiat will get 35% of Chrysler under terms of the yet-to be finalized deal. The terms also grant Fiat the option of raising its stake to 55%. (See three Fiats you might like owning...
...government bridge loan, agreed to in December. The bridge loan gives the U.S Treasury warrants to purchase 5% to 15% of the Chrysler shares now in the hands of Cerberus. Fiat will eat further into the Cerberus stake, and it also has the option of tapping into Daimler AG's remaining stake in Chrysler as a way to build its stake to 55%, according to Rebecca Lindland of the consulting firm of Global Insight...
...Fiat cruises into the ownership roundabout, Daimler is clearly looking for the exit. The German automaker owns a 19.9% stake in Chrysler but wrote down the value of the shares to zero last autumn (how's that for pessimism). Negotiations begun by Cerberus back in September to purchase Daimler's stake broke down. However, Daimler could transfer the Chrysler shares to Fiat for non-cash consideration such as patents or technology. (See pictures of the remains of Detroit...
...possible scenario under the many current agreements could have the Treasury exercising its warrants for non-voting shares, Fiat raising its stake to 55%, Daimler holding onto its share, and Cerberus and the executives holding the rest. Or, nobody could choose to exercise their rights, and Cerberus would remain the majority owner. (See the 50 worst cars of all time...