Daimler and Cerberus Prepare For Battle

daimler and cerberus prepare for battle

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.

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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.

  • FreedMike Back in the '70s, the one thing keeping consumers from buying more Datsuns was styling - these guys were bringing over some of the ugliest product imaginable. Remember the F10? As hard as I try to blot that rolling aberration from my memory, it comes back. So the name change to Nissan made sense, and happened right as they started bringing over good-looking product (like the Maxima that will be featured in this series). They made a pretty clean break.
  • Flowerplough Liability - Autonomous vehicles must be programmed to make life-ending decisions, and who wants to risk that? Hit the moose or dive into the steep grassy ditch? Ram the sudden pile up that is occurring mere feet in front of the bumper or scan the oncoming lane and swing left? Ram the rogue machine that suddenly swung into my lane, head on, or hop up onto the sidewalk and maybe bump a pedestrian? With no driver involved, Ford/Volkswagen or GM or whomever will bear full responsibility and, in America, be ambulance-chaser sued into bankruptcy and extinction in well under a decade. Or maybe the yuge corporations will get special, good-faith, immunity laws, nation-wide? Yeah, that's the ticket.
  • FreedMike It's not that consumers wouldn't want this tech in theory - I think they would. Honestly, the idea of a car that can take over the truly tedious driving stuff that drives me bonkers - like sitting in traffic - appeals to me. But there's no way I'd put my property and my life in the hands of tech that's clearly not ready for prime time, and neither would the majority of other drivers. If they want this tech to sell, they need to get it right.
  • TitaniumZ Of course they are starting to "sour" on the idea. That's what happens when cars start to drive better than people. Humanpilots mostly suck and make bad decisions.
  • Inside Looking Out Why not buy Bronco and call it Defender? Who will notice?