Cerberus Steals One from Magna
It is been reported that Cerberus bought Chrysler from DaimlerChrysler. Cerberus, a Capital management firm, known for its cost cutting measures is going to work with Chrysler Group to bring it to next level of auto makers. Inheriting a whopping $17bil in employee retirement packages might seem little odd on top of sized price tag of $7.4bil for the Chrysler assets. But looking at the $36billion deal made a decade ago by Daimler for buying Chrysler, $24.4bil (17+7.4) is not too bad a deal. Especially considering where chrysler brand is now comparing to a decade ago.
Chrysler has created a rich lineup of branded cars like Town & Country, Sebring, PT Cruiser, Pacifica and Aspen. Leave alone its convertible types. I must say there is a profound effect of Daimler and its well known brands like Mercedez in Chrysler lineup. I have no doubt in my mind that Cerberus made a very good deal and is going to reap the benefits in times to come.
For poor Magna International, Chrysler had become a dream that never turned true. Magna was the leading/lone suitor for Chrysler. Magna founder Frank Stronach had a long term ambition to become a bigger player in the global automotive business. His first bid was Chrysler. Intentions were right, timing not.
This reminds me of Cablevision acquivision by Dolans family (Jim Dolan is the CEO of Cablevision that owns MSG, Knicks, NHL Rangers and cable infrastructure in NYC). In 2006, the Dolans offered $27 a share for Cablevision, whose shares were then trading for around $24. The offer was rebuffed, resulting in a $30 offer in January. By this time stock climbed up to $27. Finally Dolans understood the classic mistake they were doing. When it looks right, sounds right go for it. Having so much interest and confidence in Cablevision, Dolans should have made a leap forward and offered $30/share that Cablevision board was demanding in 2006. That would have saved them $4bil ($22bil @ $36/share vs. $18bil @ $30/share). Dolans paid 17% premium for a decision made few months late.
Cerberus did it right first time beating Magna from getting into Dolans scenario.
At the end of the day, i give 10 out of 10 to both the Cerberus and Dolans on their deals as far as correct first step is concerned. As far as their success is concerned, time will tell.
Cheers...
It is been reported that Cerberus bought Chrysler from DaimlerChrysler. Cerberus, a Capital management firm, known for its cost cutting measures is going to work with Chrysler Group to bring it to next level of auto makers. Inheriting a whopping $17bil in employee retirement packages might seem little odd on top of sized price tag of $7.4bil for the Chrysler assets. But looking at the $36billion deal made a decade ago by Daimler for buying Chrysler, $24.4bil (17+7.4) is not too bad a deal. Especially considering where chrysler brand is now comparing to a decade ago.
Chrysler has created a rich lineup of branded cars like Town & Country, Sebring, PT Cruiser, Pacifica and Aspen. Leave alone its convertible types. I must say there is a profound effect of Daimler and its well known brands like Mercedez in Chrysler lineup. I have no doubt in my mind that Cerberus made a very good deal and is going to reap the benefits in times to come.
For poor Magna International, Chrysler had become a dream that never turned true. Magna was the leading/lone suitor for Chrysler. Magna founder Frank Stronach had a long term ambition to become a bigger player in the global automotive business. His first bid was Chrysler. Intentions were right, timing not.
This reminds me of Cablevision acquivision by Dolans family (Jim Dolan is the CEO of Cablevision that owns MSG, Knicks, NHL Rangers and cable infrastructure in NYC). In 2006, the Dolans offered $27 a share for Cablevision, whose shares were then trading for around $24. The offer was rebuffed, resulting in a $30 offer in January. By this time stock climbed up to $27. Finally Dolans understood the classic mistake they were doing. When it looks right, sounds right go for it. Having so much interest and confidence in Cablevision, Dolans should have made a leap forward and offered $30/share that Cablevision board was demanding in 2006. That would have saved them $4bil ($22bil @ $36/share vs. $18bil @ $30/share). Dolans paid 17% premium for a decision made few months late.
Cerberus did it right first time beating Magna from getting into Dolans scenario.
At the end of the day, i give 10 out of 10 to both the Cerberus and Dolans on their deals as far as correct first step is concerned. As far as their success is concerned, time will tell.
Cheers...
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