Daimler has confirmed that it is in talks with Cerberus to sell its 19.9% stake in former partner Chrysler.

In a short official statement the company said:

'Daimler confirms that the company is in discussions with Cerberus Capital Management regarding the redemption of its remaining 19.9% stake in Chrysler LLC.'

Daimler's statement follows an earlier statement from Cerberus that it had approached Daimler about redemption of the stake.

DaimlerChrysler, formed in 1998, was the biggest industrial merger of all time, but the company broke up in May 2007 when private equity firm Cerberus puchased 80.1% of Chrysler. Daimler AG hung on to a 19.9% stake in the company.

Daimler said in July the book value of its stake was EUR171m, but the likely market value of the stock it holds is unclear.

Chrysler this week surprised many with its unveiling of three electric car prototypes in the US. However, the company is said to be in deep financial trouble on the back of lower US sales and a product range lacking the smaller and more fuel efficient vehicles that American consumers are turning to.

Legacy technology ties between the two firms are not expected to be affected by a Daimler stake sale, at least for the forseeable future. Cerberus said that it expected all existing industrial relationships between Daimler and Chrysler to continue.

It's unclear at this stage why the sale of Daimler's stake is being discussed now. Some analysts have speculated that Cerberus may be seeking 100% ownership prior to a sale.

Daimler meanwhile, may be seeking to cut its Chrysler losses and make maximum use of available resources and liquidity in the face of ongoing cost pressures and uncertain demand prospects.

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