Show Me The Money!

May 15th, 2007

Daimler Chrysler has thrown off the Chrysler moniker, selling off it’s American arm to Cerberus Capital Management. (What will they call the new company, Cerberus-Dodge?)

What’s been fun the past few months, is listening to analysts, and unionists, saying that whoever buys Chrysler will need the blessing of the unions. Talk about letting Buzz control the buzz. But it was always a ridiculous argument, that somehow the union controlled the destiny of the company. And thus it has been proven, as Magna selling out it’s own workers wasn’t enough to get it the company:

The offer by Cerberus Capital Management for the Chrysler Group is far superior to other bids including one from Canadian corporate titans Magna International Inc. and Onex Corp., industry sources say.

Chrysler’s German parent, DaimlerChrysler Group, announced yesterday that Cerberus, one of the largest private equity firms in the world, is taking an 81 per cent stake of the auto maker’s North American operations and its related financial services business for $7.4 billion (U.S.).

“It was substantially higher than the others,” said one official familiar with the bids.

Under its offer, Cerberus will also assume Chrysler’s long-term liabilities for pension and health-care benefits.

One analyst indicated recently that Magna-Onex was a leading contender and would value Chrysler at about $5 billion, excluding Chrysler Financial.

Billionaire Kirk Kerkorian’s Tracinda Corp. publicly bid $4.5 billion in cash but industry watchers said DaimlerChrysler was seeking an offer in the $8 billion to $9 billion range. Other equity funds including Blackstone Group in the U.S. also showed interest in Chrysler.

So it was about the money, not who could get along with the unions? Really? After Daimler spent all those years playing nice with it’s workers, now the CAW is surprised it wasn’t consulted on a $7B deal?

On the eve of what could be an important day in Chrysler’s history, the Canadian Auto Workers’ union was disappointed Sunday it had yet to hear from Cerberus Capital Management LP, which recently emerged as the likely winning bidder to buy Chrysler Group from DaimlerChrysler AG.

The New York-based private-equity firm has not approached the CAW, said Local 444 President Ken Lewenza, expressing his disappointment over reports that Chrysler’s fate could be sealed today.

“(Cerberus) has never, ever talked to the CAW,” Lewenza said. “All I know is what I’ve seen and heard in the media, but I would be very disappointed if an equity firm came in and took over.”

The United Auto Workers union in the U.S. and CAW have objected to Chrysler’s sale to a private-equity firm, saying they fear such a buyer would try to return the company to profit by wringing savings from labour.

“Whoever buys Chrysler is going to have to respect our collective bargaining agreement,” CAW president Buzz Hargrove said.

UAW spokesman Roger Kerson couldn’t be reached for comment.

Lewenza said he was not surprised by Cerberus’ sudden move into the spotlight.

“By hiring (former Chrysler Chief Operating Officer) Wolfgang Bernhard, they put themselves on the map and got people’s attention,” he said. “The focus on Magna was mostly because (CEO) Frank Stronach made his bid public.”

Hargrove said Bernhard has a strong personal relationship with DaimlerChrysler Chief Executive Officer Dieter Zetsche.

“From DaimlerChrysler’s standpoint, it’s purely about who could put the most cash in their pockets the fastest,” said Dan Luria, an analyst for the Michigan Manufacturing Technology Institute in Plymouth, Mich. “Cerberus clearly has deep pockets.”

Note this bad habit Buzz has: he bad mouths the guy with power. He spent an election saying anyone but Harper. When Harper wins, of course, he’s shocked and surprised to find himself on the outside. They did the same thing with Mike Harris. Now, the ink isn’t dry on the sale, and Buzz is bad mouthing a) the new company and b) the new guy in charge. So here’s a prediction. Sometime in the next year, Buzz will be publicly complaining about how the new owners are not respecting/not listening to/not concerned about the CAW and the workers.

And then he’ll wonder why.

CAW, I Love My Job, Wasted Away Again in Buzzistan

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