Cerberus/Chrysler
University of Phoenix
MBA/531 Human Capital Development
October 16, 2008
In a recent buyout between Cerberus and Chrysler, Cerberus takes over 80.1% in the Chrysler Holding LLC, while DaimlerChrysler retains a 19.9% interest, as announced. While, DaimlerChrysler and Cerberus have agreed to support the financing of the majority takeover of Chrysler by Cerberus in light of highly volatile US loan markets. “Both companies will subscribe $2 billion of second lien debt for Chrysler's automotive business, to be drawn within 12 months. DaimlerChrysler's portion will be $1.5 billion.”(Flint, Jerry) “Chrysler has hired Mr. Nardelli as chief executive and chairman, reports suggest he will earn just $1 a year with generous performance-related bonuses adding to the his salary.”(Flint, Jerry) Cerberus has gone through several key changes both in leadership and direction since acquiring Chrysler. Defining the scope will further define the risks that Cerberus is going to encounter with the acquisition of Chrysler. One of the directions that Cerberus could pursue is to increase their presence in the automobile industry long term. Cerberus owns a 51 percent stake in GMAC Financial Services. It also owns Guilford Mills, the largest automotive seating supplier in the United States, and Peguform Group, a German-based manufacture of interior and exterior plastic parts used in autos. It recently completed its acquisition of Novi-based auto supplier Tower Automotive LLC” (Record, 2007). These acquisitions could reflect a strategic plan that entails the increase of their presence in the automobile industry. The potential risks associated with this expansion process are many and vary widely.
Dealing with the company’s long-term reti ...