Daimler and Cerberus Prepare For Battle

John Horner
by John Horner

The latest skirmish is ostensibly over the price tag to be placed on Daimler’s remaining ownership share of Chrysler, but what we are really seeing are early salvos in the “you ripped us off” lawsuit Cerberus is destined to file against Daimler. Daimler put out a terse press release this morning saying: “The negotiations between Daimler AG and Cerberus Capital Management LLC on the redemption of Daimler’s 19.9% shareholding in Chrysler Holding LLC (“Chrysler”) and other issues related to Cerberus’s investment in Chrysler have been made considerably more difficult during the last weeks due to exaggerated demands by Cerberus. These demands by Cerberus exceed the value of Cerberus’ investment in Chrysler. For the acquisition of an 80.1% stake in Chrysler, Cerberus had invested USD 7.2 bn. The claims made now go beyond the framework of the contractually agreed possible obligations under representations and warranties. The new claims also include an allegation of conduct outside the ordinary course of business by Daimler during the time between signing and closing of the transaction as well as the allegation of incomplete information about the business. Daimler rejects these absurd allegations and the claims derived there from as being completely without substance.”Reading between the lines, it sounds like not only is Cerberus is demanding that Daimler’s remaining ownership interest be handed over gratis, but also for Daimler to pony up cash in excess of Cerberus’ original investment. “Representations and warranties” is the section of a contract wherein each side declares that it is telling the truth, the whole truth and nothing but the truth … sort of. That “possible obligations” phrase refers to limitations of compensation to be paid in the event something not truthful or complete later comes to light. The “allegation of conduct … between signing and closing” zinger means that Cerberus is accusing Daimler of stealing significant assets from Chrysler during the period of time between the contract signing and the actual turn over. Kind of like ripping out the kitchen sink after selling your house, but before turning over the keys. Zoinks! Cerberus is angling for a way around the limitations of the reps and warranties section. Nearly a year ago, Justin foretold a Cerberus lawsuit against Daimler, and he is looking very smart right now.You have to feel just a little sorry for Daimler. The Germans paid $300 million in 2003 to settle a lawsuit by Kerkorian & Friends which alleged that Daimler used fraud to underpay for Chrysler back in 1998. After losing most of its investment in Chrysler, Daimler is once again facing the legal dogs of war over how it gave the company away. The US may be losing its grip on running car companies, but we sure know how to keep the lawyers busy.

John Horner
John Horner

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  • John Horner John Horner on Nov 26, 2008

    "Since Daimler already considers the value of their share in Chrysler to be worthless, just give it to Cerberus for free." Ah, but Cerberus appears to want more than that. They want Daimler to put more cash on the barrel AND give up the remaining shareholdings. "We waz wobbed" they say.

  • Psarhjinian Psarhjinian on Nov 26, 2008

    Wasp landing on thistle. Someone's going to get stung, and it's going to be fun to watch.

  • JOHN One is for sale on an ebay car donation site.https://www.ebay.com/itm/305579991767?itmmeta=01HYHVJ49MCC6HEWQY5AX9MX85&hash=item4725fca2d7:g:k9cAAOSw5V5mThFw
  • Scott So they are losing hundreds of millions of dollars and they are promising us a “Cheaper EV”? I wonder how that will look and feel? They killed the Fiesta because they claimed that they couldn’t make a profit on them and when I bought the first one in late 2010 they couldn’t deliver the accessories I wanted for it! Then I bought a 2016 Fiesta ST and again couldn’t get the accessories for it I wanted. They claimed that the components were going to be available, eventually. So they lost on that one as well! I don’t care about what they say anymore. I’ve moved on to another brand.
  • Michael S6 CX 70 or 90 will not be on my buying list. Drove a rental base CX 90 and it was noisy and the engine noise was not pleasant. Ride was rough for a family SUV. Mazda has to understand that what is good for Miata isn't what we expect in semi luxury SUV. My wife's 2012 Buick Enclave has much better Ride and noise level albeit at worse gas millage. Had difficulty pairing my phone with Apple CarPlay
  • Michael S6 What is the metric conversion between one million barrels and the number of votes he expects to buy.
  • NJRide This could give Infiniti dealers an extra product maybe make it a sub brand