Cerberus Capital Management LP and leaders of the Chrysler Group will try to convince labor leaders that their $7.4 billion deal will give workers better job security, restore Chrysler's health and not "strip and flip" the company by selling it off in pieces, the Associated Press reports.
Cerberus currently controls Vanguard Car Rental, which in turn owns Alamo and National Car Rental, but it is in the process of selling the company to Enterprise Rent-A-Car, according to the International Herald Tribune.
United Auto Workers President Ron Gettelfinger said the deal was "in the best interest of our membership" and the auto companies, noting that Cerberus had vowed to bolster its commitment to Chrysler's 80,000 workers’ pension benefits.
But Canadian Auto Workers President Buzz Hargrove says that many private equity groups have a long-standing history of slashing jobs in order to boost profits for investors.
DaimlerChrysler was scheduled to release its first-quarter earnings after announcing the sale of 80.1 percent of Chrysler to Cerberus. It brings to a close the $36 billion "merger of equals" that in 1998 attempted to create the ultimate global automotive powerhouse.
According to the AP, Cerberus has steadily been building strength in the automobile business. It led a group that bought a majority stake last year in General Motors Acceptance Corp., the financial arm of GM, and planned to invest in ailing auto parts giant Delphi Corp.
