Last August, when Daimler sold 80.1 percent of Chrysler to Cerberus Capital Management LP, Daimler valued its remaining 19.9 percent at about $2.19 billion. Daimler since has lowered that twice and pegged it at $845 million at the end of the first quarter.
Since Daimler owns one-fifth of Chrysler, you could do an exercise in simple math: Multiply that $845 million by five. That would mean the total book value of Chrysler is $4.2 billion — down, by Daimler's assessment, from about $11 billion at the time of the deal with Cerberus.
But nothing is that simple in the world of private equity ownership and international finance.
For one thing, the two companies don't use the same accounting standards.
Also, Chrysler is the only privately owned major carmaker and as such doesn't have to share details of its financial performance. Chrysler CEO Bob Nardelli has said only that Chrysler will not be profitable in 2008. But he says the company is on target to hit the goals set by Cerberus. Chrysler issued a statement last week saying it has “enjoyed positive operating earnings” since the Cerberus takeover on Aug. 3, 2007.
Nardelli said recently: “We are very pleased, in spite of some of the economic winds that are hitting us.”
You can reach Bradford Wernle at email@example.com