So GM and Chrysler are next in line with their hand out, asking for $10 billion from the taxpayers to fund a merger between the two companies. I sure don’t see the logic of combining one crappy company with a really crappy company but nobody asked me.
Should the government help the auto companies? Not Chrysler, which is owned by Cerberus Capital Management LP, a private equity firm run by former Treasury secretary John Snow. Cerberus’s portfolio companies generate revenues of more than $60 billion a year. They put up only $500 million of the $12 billion they paid for Chrysler, the rest was put up by investment banks.
Cerberus takes control of Chrysler today
August 3, 2007. Today is the day that Cerberus Capital Management LP takes an 80.1% controlling stake in Chrysler, leaving DaimlerChrysler a minority 19.9% share. The “merger of equals” that took place back in 1998 has officially ended, and Chrysler is now a privately-held company with a wide open future. Much ado was made about the difficulty in financing the deal and Chrysler’s turnaround effort, but it appears the original amount of $12 billion has been secured. Around $10 billion will come from investment banks, while Cerberus will throw in $500 million and DaimlerChrysler $1.5 billion.
Actually, it was an even better deal than that for Cerberus,
Cerberus’ winning bid is, rather than the highest price, more like the proposal that will cost Daimler the least. “DaimlerChrysler is paying Cerberus to take Chrysler off its hands,” says David Healy, auto analyst at Burnham Securities.
And now they want you and I to take Chrysler off their hands? This is really another bailout of Wall Street investment banks. I’m sorry fellas, but $700 Billion will have to be enough for now.