Daimler, Cerberus Dispute over Chrysler

Daimler AG went public today with what sounds like a potentially ugly dispute with Cerberus over Chrysler.

Cerberus bought 80.1 percent of Chrysler for about $7.2 billion in August 2007, undoing the DaimlerChrysler merger, which took place back in 1998.

In September, the two companies disclosed they were in negotiations for Cerberus to acquire the remaining 19.9 percent of Chrysler. Meanwhile, Daimler wrote off the value of its share of Chrysler.

Cerberus and Daimler have found plenty to fight about. Last month, the two companies wrangled over the proper value to set on Chrysler’s net losses. In the course of that dispute, Chrysler indirectly disclosed that it lost $660 million in the second quarter. Chrysler accused Daimler of attributing some losses to Chrysler that in Chrysler’s view didn’t belong to Chrysler.

Today, it was Daimler’s turn to complain about Cerberus (password required for Daimler media site). According to a written statement from Daimler, Cerberus has accused Daimler of, “conduct outside the ordinary course of business by Daimler during the time between signing and closing of the transaction,” referring to the August 2007 buyout. So far, there’s no additional word from either company about the specific nature of that accusation.

According to Daimler, Cerberus has also accused Daimler of providing, “incomplete information about the business.” That seems to imply that according to Daimler, Cerberus is claiming Chrysler was in worse shape than Cerberus realized, when it bought its controlling share last year. Daimler says the charges are “absurd.”

Daimler also says Cerberus is making “exaggerated demands,” which have served to make the negotiations over Daimler’s 19.9 percent of Chrysler “considerably more difficult.”

This isn’t the first or likely the last dispute to grow out of the DaimlerChrysler merger and divorce. Former Chrysler officials managed to shed some crocodile tears in an earlier, unsuccessful lawsuit by investor Kirk Kerkorian that claimed Daimler somehow misled Chrysler into thinking it would be an equal partner, when in fact Daimler was taking control of Chrysler.

In the present dispute, neither company so far has commented, beyond Daimler’s written statement.