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Daimler in talks to sell rest of Chrysler

September 25, 2008|From the Associated Press

DETROIT — German automaker Daimler said Wednesday that it was in talks to sell its remaining stake in Chrysler to private equity firm Cerberus Capital Management.

Daimler spokesman Han Tjan confirmed a report in Germany's Manager Magazin that the company was in talks to sell the 19.9% stake, but he would not say how long the discussions had taken place or give other details.

Cerberus said in a statement that it approached Daimler about the purchase. If the transaction is successful, "all existing industrial relationships between Daimler and Chrysler would continue," the statement said, giving no details.

Cerberus bought 80.1% of Chrysler from Daimler in August 2007 in a $7.4-billion deal. The sale ended the stormy nine-year marriage of Daimler and Auburn Hills, Mich.-based Chrysler. The companies have continued to share diesel engine and other technology.

Since Cerberus took control of the automaker, Chrysler has faced tough times. The U.S. economy and auto sales have slumped, and $4-a-gallon gasoline has sent consumers away from its trucks and sport utility vehicles toward small cars, a market segment in which Chrysler's lineup is thin. Sales this year were off 24% through August.

As a private company, Chrysler does not have to report its earnings, but reporters and analysts were able to calculate Chrysler's performance from Daimler's financial statements. Cerberus' purchase of the rest of the company would make Chrysler's earnings completely private.

On Tuesday, top Chrysler executives told dealers that the company had lost $400 million this year. Chief Executive Robert Nardelli and Vice Chairman Jim Press used a satellite feed to address dealers who gathered in movie theaters across the country for a presentation on the state of Chrysler's business and future products.

The executives did not state the time frame for the $400-million loss, nor did they say whether it was an operating or net loss, according to a dealer who saw the presentation. The dealer did not want to be identified because the meetings were private.

Chrysler has said it lost $400 million in the first quarter.

Daimler has indicated through its financial results last month that Chrysler lost an estimated $510 million in the first quarter. Chrysler lost $1.6 billion in 2007.

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