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Editorial: The Hemi gets sold
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The union of Chrysler and Daimler-Benz was billed as a merger of equals and a marriage made in heaven. It was neither nor did it ever come close to its goal of a worldwide automotive giant through that mysterious business elixir called "synergy."
Monday, DaimlerChrysler it will take until this fall to change the name said it sold 80 percent of the company it bought for $36 billion in 1998 for $7.4 billion. The buyer is Cerberus Capital Management, a private equity company, meaning that it can operate basically without regard to what Wall Street thinks.
Typically, private firms ruthlessly slash costs and operations of an acquired company so that the stripped-down entity can be sold at a profit, as a whole or in pieces.
Cerberus' chairman, former U.S. Treasury Secretary John Snow, says that won't be the case. And his company, which earlier bought auto-financing company GMAC and committed to buying into auto-parts maker Delphi, is now a major player in the industry with the acquisition of Chrysler, the third of the Big Three.
It is a big risk. The American car market is ruthlessly competitive and Cerberus assumes billions in so-called legacy costs, the pensions and health benefits of Chrysler retirees.
The corporate cultures of Daimler and Chrysler never really meshed. Their respective expertise was in different types of markets with different kinds of cars. And the Daimler-Benz stockholders never did seem very happy with the deal.
Chrysler is an 83-year-old American automotive brand. Indeed, the company originally made the Maxwell that comedian Jack Benny claimed to drive.
The company is very much a part of our past and, one hopes, under new management, our future.
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