Cerberus: Chrysler To Remain Intact

Anthony Fontanelle
May 18, 2007

The Cerberus Capital Management LP met with 100 United Auto Workers (UAW) officials to assure them the automaker would remain intact. During the two-hour meeting in Detroit, Cerberus CEO Steve Feinberg told the officials who represent Chrysler's plant workers that the automaker would remain intact.

"There's no intention to sell parts of the company or break it up," Feinberg told union officials. Feinberg said that Cerberus' $7.4 billion acquisition of an 80.1 percent stake in Chrysler is a long-term investment. The deal unravels a $36 billion "merger of equals" between Daimler-Benz and Chrysler Corp. in 1998, an attempt to create a global automotive powerhouse "He said Daimler did care about who they were going to sell Chrysler to," said a local president who talked on condition of anonymity. Sources said Feinberg's words were met with standing ovations.

Former Chrysler executive Wolfgang Bernhard also graced the gathering at the UAW-DaimlerChrysler National Training Center. According to a UAW local president, Bernhard spoke briefly but mainly smiled and waved to familiar faces. Union officials who attended the meeting said that it helped to calm their concerns. They walked in with deep reservations but left feeling positive about the Auburn Hills-based automaker's new owners. "It was a meeting to sell this to us," said a local president. "If (Cerberus) follows through with everything that they said and don't spin everything off, there's not going to be any difference. Nothing is going to change other than who owns you."

A panel including Chrysler CEO Tom LaSorda, UAW President Ron Gettelfinger and UAW Chrysler negotiator General Holiefield answered questions that covered several topics - from Chrysler’s products to Chrysler's upcoming transformation from a public to a private entity. Union officials said that they felt re-energized after the meeting, and planned to immediately share details with the workers they represent. "Chrysler is back on U.S soil," one said. Another concurred: "There was a consensus that we're back in business as an American company."

The DaimlerChrysler AG announced Monday the deal to sell its American division to Cerberus. The said announcement was vocally opposed by Gettelfinger. But like the swift performance pulleys, the union leader shifted to the other side after learning more about the firm. Union officials said that Gettelfinger mentioned his change of heart. They explained that the UAW was familiar with Daimler but did not know Cerberus.

Gettelfinger also talked about his previous statements about private equity firms. "He said he realized that that was not the intention of Cerberus," said a union official. He said he made a last-minute pitch to keep Chrysler with DCX over the weekend but, when that failed, he decided to embrace the Cerberus purchase. "Daimler will regret the day of selling us. Let's close the chapter on DaimlerChrysler and open the book on Chrysler Corp.," Gettelfinger noted.

On Wednesday, DCX’s supervisory board formally cleared the way for the acquisition of the company’s money-losing American unit. In a statement, the German automaker through its board, “approved the concept for the Chrysler Group and the realignment of the DaimlerChrysler AG in the form submitted by the board of management." DCX added that "the closing of the transaction is expected to take place in the third quarter," but gave no further details about it.

The supervisory board's approval was essentially a formality after both North American and German labor unions voiced support for the deal with Cerberus.

Source:  Amazines.com