As if the calamity going on right now in Detroit wasn’t enough for the Big Three to handle, Cerberus – the parent company of Chrysler LLC – has gotten into a bit of a shouting match with former Chrysler owner, Daimler. As you may recall, Cerberus is interested in acquiring the remaining 19.9 percent of Chrysler from Daimler, but apparently the two sides can’t even come close to an agreement at the negotiation table.
Daimler started the public dispute earlier on Wednesday when it released a statement regarding Cerberus’ handling of the negotiations. Daimler labeled Cerberus’ demands as “exaggerated,” indicating the investment firm wanted more than the $7.9 billion it paid for an 80.1 percent stake in Chrysler last year.
Not to be outdone, Cerberus released a statement shortly after explain why it was seeking so much from Daimler. Cerberus claims that Daimler breached its original contract while it had control of Chrysler by “misrepresentations relating to extraordinary changes in underwriting practices with regard to vehicle acquisition financing and leasing, as well as non-ordinary course lending and leasing practices.”
It doesn’t sound like the situation will be resolved anytime soon, but with Chrysler’s current financial situation, something has to give. The situation really comes down to the fact that Daimler values its share of Chrysler at zero and Cerberus needs Daimler’s stake in the Michigan automaker in order to sell all or part of Chrysler. It sounds to us like Daimler has the upper hand, so we fully expect Cerberus to tone down its demands in the coming months.
