Monday, June 4, 2007

Cerberus exec: 'Due diligence is done' on Chrysler

Bradford Wernle
Automotive News
June 4, 2007 - 1:00 am

Cerberus Capital Management, soon to be taking ownership of 80.1 percent of Chrysler, has completed its inspection of Chrysler. All that's left is the paperwork leading to final signatures.

"Due diligence is done," Cerberus Managing Director Tim Price said in a phone interview. Anyone who believes that due diligence only began in earnest once the deal was signed is seriously mistaken, he said. The deal will be signed in the third quarter.

Having charmed DaimlerChrysler executives and skeptical labor union officials alike in a whirlwind courtship, Cerberus and its team then will settle in to running the largest acquisition they've ever made. All eyes will be on them.

Colin Blaydon, director of private equity studies at the Tuck School of Business at Dartmouth College, said the Cerberus-Chrysler deal is an "absolutely iconic deal" that will demonstrate the belief of private equity practitioners that they can outperform public companies.

Cerberus is roughly doubling its size. Revenues for all Cerberus' combined businesses equal more than $60 billion. Chrysler revenues were about $62.2 billion last year.

Industry pundits have said Chrysler will be a "stand-alone" American car company after it leaves Daimler. Not necessarily so, says Price.

Cerberus marches to a different drummer than other private equity firms, he says.

"We're not considered a private equity firm but more like a holding company such as GE (General Electric Co.) that builds and delivers a return," said Price, former COO of MCI Worldcomm, the defunct telecommunications firm.

Cerberus brings a team of 300 executives like Price -- roughly 150 finance professionals and 150 operational specialists -- to bear on the companies it owns. Whether it's logistics, banking, marketing or whatever, Cerberus has people it can parachute in to solve problems, he said.

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