Daimler-Chrysler

DaimlerChrysler AG, 1998–2007

Daimler-Benz AG and the American automobile manufacturer Chrysler Corporation merged in 1998 in an exchange of shares as Daimler-Benz AG bought 92% of Chrysler, and 8% of Chrysler remained independent. The conglomerate became known in the U.S. as Daimler Chrysler. The terms of the merger allowed Daimler-Benz's non-automotive businesses such as Daimler-Benz InterServices AG to continue to pursue their respective strategies of expansion.

The merger was contentious with investors launching lawsuits over whether the transaction was the 'merger of equals' that senior management claimed or actually amounted to a Daimler-Benz takeover of Chrysler. A class action investor lawsuit was settled in August 2003 for $300 million while a suit by billionaire investor activist Kirk Kerkorian was dismissed on 7 April 2005. he transaction claimed the job of its architect, Chairman Jürgen E. Schrempp, who resigned at the end of 2005 in response to the fall of the company's share price following the transaction.

Another issue of contention is whether the merger delivered promised synergies and successfully integrated the two businesses. As late as 2002, DaimlerChrysler appeared to run two independent product lines. Later that year, the company launched products that appear to integrate elements from both sides of the company, including the Chrysler Crossfire, which was based on the Mercedes SLK platform and utilized Mercedes's 3.2L V6, and the Dodge Sprinter/Freightliner Sprinter, a re-badged Mercedes-Benz Sprinter van.

Chrysler reported losses of US$1.5 billion in 2006. It then announced plans to lay off 13,000 employees in mid-February 2007, close a major assembly plant and reduce production at other plants in order to restore profitability by 2008. Daimler-Chrysler had reportedly approached other carmakers and investment groups to sell Chrysler in early 2007. On 3 August 2007, DaimlerChrysler completed the sale of Chrysler Group to Cerberus Capital Management. The original agreement stated that Cerberus would take an 80.1 percent stake in the new company, Chrysler Holding LLC. DaimlerChrysler changed its name to Daimler AG and retained the remaining 19.9% stake in the separated Chrysler.

Of a whopping $7.4 billion purchase price, Cerberus Capital Management will invest $5 billion in Chrysler Holdings and $1.05 billion in Chrysler's financial unit. Cerberus was also paid $650 million in agreement to assume the associated liabilities of Chrysler. Daimler AG received $1.35 billion directly from Cerberus but directly invested $2 billion in Chrysler itself.

In 2009 Chrysler filed bankruptcy. The Fiat Group of Italy became the majority shareholder of Chrysler in July 2011.