Three-headed Dog
The big news this morning is that Chrysler has been sold to the private equity firm Cerberus Capital Management for $7.4 billion.
Cerberus is named after the three-headed creature from Greek mythology that guarded the gates of Hades. Cerberus had a snake for a tail, and was also seen depicted with a dragon’s tail and serpentine mane. Cerberus guarded the gates, ensuring that the souls of the dead could enter but none could exit. It also ensured no living person could enter Hades.
But don’t expect this modern-day Cerberus to just sit at the gate guarding the company. If you know how private equity firms work, you know that this three-headed dog will transform the bowels of Chrysler not with a whine, or even a bark, but with a vicious and determined bite. It will focus on inefficiencies that drag down productivity and profits. It will do everything it can to make Chrysler as profitable as possible, with the ultimate goal of selling the company down the road for a huge return of investment.
I imagine there are a few fat-cats that are terrified by this news of Cerberus purchasing Chrysler. Can you say concessions?
Speaking of concessions, the response by one unions is strange. An Associated Press story that appeared on SFGate.com reports that earlier this year, United Auto Workers President Ron Gettelfinger warned that a private equity buyer would “strip and flip” the company by selling it off in pieces. But apparently Gettelfinger is the one who has flipped. He now says, “We made the pitch all the way home that we wanted the Chrysler Group to stay under the Daimler umbrella but it’s not there. The decision has been made, we’re supportive of it.”
TIme will tell what the transformed company will look like. It will be interesting to see how the transformation affects future Chrysler vehicles.
Thanks for reading.
Joe Escobar