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Two Private Equity Firms Interested on Chrysler

February 14 was a sad day for Chrysler employees in the country. On that day, DaimlerChrysler Chief Executive Officer Dieter Zetsche announced that due to the poor performance of the U.S. brand, all options are open for the brand including its sale. The day also saw the workforce reduction carried out by the company as a part of its restructuring plan.

The speculations that Chrysler will be for sale is made even more plausible with the emergence of interested firms popping out and saying that they are interested in buying the U.S. arm of DaimlerChrysler AG. It can be remembered that Chrysler has already planed to cut down the number of their employees in the following months.

Aside from workforce reduction, the restructuring plan of Chrysler involves closing down of a plant and eliminating shifts on two plants. These steps, as Chrysler maintained, are necessary to address the reduced demand for their vehicles.

Recently, The Associated Press reported that there are now two firms which are most likely going to be the next owner of Chrysler. The Cerberus Capital Management LLC and a group of investors led by the Blackstone Group and Centerbridge Partners LP. These firms have expressed their intention to buy the troubled company. The American news agency reported that representatives of the group have made a visit at Chrysler’s headquarters in Auburn Hills, Michigan.

The Associated Press also spoke with a Chrysler insider who disclosed that potential bidders are now looking into Chrysler’s financial status.

Another firm that has shown interest in Chrysler is Canadian car parts manufacturer Magna International along with the largest car manufacture in the world, General Motors. Although the Canadian firm has shown interest, insiders said that the possibility of the Canadian firm buying the company has been reduced. There are also other firms that have shown interest on Chrysler although these are not as strong as the interest shown by Cerberus and Blackstone are Apollo Management LP, and the Carlyle Group. These firms have not yet made comments about their interest on the car maker.

As far as the rumored takeover of General Motors of the ailing Chrysler group, experts pointed out that it looks unlikely. While General Motors has yet to comment about the rumored interest they might have on the third U.S. car maker, speculations in the auto industry says that the world’s largest car manufacturer will not gain any advantage from the acquisition of the ailing group. On the other hand, another U.S. brand, Ford, when asked whether there is a possibility of them buying Chrysler, Ford CEO Alan Mulally flatly said that it will never happen.

On a sudden twist, DaimlerChrysler AG Chief Executive Officer Dieter Zetsche has announced that there is a possibility that Chrysler will still remain as a part of the German company. But the emergence of the two firms most interested in the purchase of Chrysler has a look similar to Nissan cornering lights which shows which way Chrysler is going in the future.

About the Author

Ryan Thomas is a native of Denver, Colorado. He grew up in a family of car afficionados. He now resides in Detroit where he owns a service shop and works part time as a consultant for a local automotive magazine.

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