DaimlerChrysler board OKs Chrysler sale

updated 8:11 a.m. ET May 16, 2007

BERLIN - DaimlerChrysler's supervisory board on Wednesday formally cleared the way for the sale of most of the company's money-losing U.S. unit, Chrysler Group, to private equity firm Cerberus Capital Management LP.

The board, the equivalent of a U.S. board of directors, "today approved the concept for the Chrysler Group and the realignment of DaimlerChrysler AG in the form submitted by the board of management," DaimlerChrysler said in a statement.

It added that "the closing of the transaction is expected to take place in the third quarter," but gave no further details. It did not elaborate on the board meeting.

DaimlerChrysler announced on Monday its plan to sell 80.1 of Chrysler to Cerberus in a 5.5 billion euros ($7.45 billion) deal. The future Daimler AG will retain a 19.9 stake in Chrysler.

The deal unravels a $36 billion "merger of equals" between Daimler-Benz and Chrysler Corp. in 1998, an attempt to create a global automotive powerhouse.

The supervisory board's approval was essentially a formality after both German and North American labor unions earlier this week voiced support for the deal with Cerberus.

United Auto Workers President Ron Gettelfinger said Monday that he made a last-minute pitch to keep Chrysler with Daimler over the weekend but, when that failed, he decided to embrace the Cerberus purchase.

DaimlerChrysler shares rose 0.4 percent to 63.77 euros ($86.45).

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