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Fur flies between Cerberus, Daimler

by David Zatz on

A day after Daimler claimed that Cerberus was making “exaggerated demands” for the remaining 19.9% of Chrysler, Cerberus accused Daimler AG of “intentionally and materially” misleading Cerberus during the 2007 buyout; and claimed that Daimler broke its contractual obligations, misrepresenting changes in underwriting for financing and leases.

Cerberus issued a statement alleging that Daimler has “refused to recognize the gravity of the claims relating to its deliberate conduct that resulted in the impairment of Chrysler’s business.”

A Daimler spokesman said these claims were false, and Daimler issued a statement claiming that Cerberus was demanding that Daimler provide more funding than Cerberus had paid for Chrysler.

Daimler acquired a healthy, profitable Chrysler Corporation in 1998, claiming it would be a merger of equals; while Daimler-Benz was three times Chrysler’s size, it had much smaller profits. Nine years later, Daimler, having stripped Chrysler of cash and numerous assets, and turned Chrysler’s vehicle lineup from critical acclaim to critical rejection, sold the remains to Cerberus for a relatively small sum.

At least one insider alleged to Allpar two months ago that Cerberus was contemplating action against Daimler for misleading terms.


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