Just as things are starting to look extremely dark for General Motors, cross-town rival Chrysler is having an upswing in luck. After finally getting unions in the United States and Canada to agree to further concessions, Daimler – the former owner of Chrysler – has agreed to hand over its stake of the Michigan automaker.
According to the press release, Daimler reached an agreement with Chrysler, Cerberus Capital Management and U.S. Pension Benefit Guaranty Corp. on Monday to shed its 19.9 percent stake in the ailing automaker. Daimler owned Chrysler from 1998 until 2007, retaining a minority 19.9 percent stake in the company since its sale.
The terms of the agreement will also forgo any loans due to Daimler from Chrysler that have written off for the 2008 fiscal year. Daimler will also contribute $200 million per year to Chrysler’s pension plan from 2009 to 2011, per the terms of the agreement.
Daimler has been looking to end its relationship with Chrysler for several months now, but couldn’t find common ground with current owner Cerberus. However, with the government’s deadline for viability now just three days away, it seems a fire was lit under all parties involved. The loss for Daimler is a small price to pay, especially considering it values its share of Chrysler at $0, a far cry from its 2007 value of more than $2 billion.
