NEW YORK (Reuters) - Less than two years after paying more than $7 billion to take control of Chrysler, Cerberus Capital Management agreed to give away more than a third of the struggling automaker to Italy's Fiat without any cash in return.
Despite the desperate terms of the swap, analysts said Cerberus could still emerge a winner by moving closer to an exit strategy for its troubled investment in the struggling U.S. automaker.
The private equity firm, which owns an 80.1 percent stake in Chrysler, would give Italy's Fiat a 35 percent share in Chrysler in exchange for access to Fiat's small car technology and overseas markets.
The stark terms of the cash-free deal with Fiat would leave Cerberus with a diminished stake in an automaker still facing an uncertain future and an alliance that will almost certainly force it to yield some operational control, analysts said.
But Cerberus could still look to limit its losses after clinching a U.S. government rescue for Chrysler's automaking operations and its affiliated finance arm, Chrysler Financial.
6. LOL! the GM bailout does need some changes, but making the union
lower their wages to the transplants level is an outrage. I think that transferring the retirees healthcare to a government program would be better as far as cutting costs go. Medicare's administration cost is so much lower.. I think it's something like 3% compared to private insurance which runs around 27%. I don't have a problem with transferring that.
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