Daimler has said that the sale of its remaining 19.9% stake in Chrysler to Cerberus has been complicated by the ‘exaggerated demands’ made by Cerberus.
Daimler maintains that the demands by Cerberus exceed the value of Cerberus’ investment in Chrysler.
For the acquisition of an 80.1% stake in Chrysler, Cerberus had invested USD7.2bn, it says. The claims made now go beyond the framework of the contractually agreed possible obligations under representations and warranties, Daimler says.
The new claims by Cerberus also include an allegation of conduct outside the ordinary course of business by Daimler during the time between signing and closing of the transaction as well as the allegation of incomplete information about the business. Daimler said it ‘rejects these absurd allegations and the claims derived therefrom as being completely without substance’.
The negotiations between Daimler Cerberus Capital Management on the redemption of Daimler’s 19.9% shareholding in Chrysler and other issues related to Cerberus’s investment in Chrysler have been made considerably more difficult during the last weeks due to exaggerated demands by Cerberus, Daimler claimed.
Cerberus retorted with a statement saying the lengthy negotiations are the result of Daimler’s own misconduct.
Daimler ‘intentionally and materially’ misled Cerberus before it sold Chrysler last year, the private equity firm maintains.
Cerberus alleges that Daimler breached its contract by not disclosing Chrysler’s leasing and financing practices prior to the sale.
“Daimler has, unfortunately, refused to recognize the gravity of the claims relating to its deliberate conduct that resulted in the impairment of Chrysler’s business and added to and multiplied the adverse effects of the current automotive and macro economic environment,” Cerberus said. “We are disappointed that Daimler has refused to negotiate in good faith in the face of the plain facts of which they are well aware.”
This could be one that will run for a while longer.