Cerberus close to sealing Chrysler deal: source

Sun May 13, 2007 7:47PM EDT

NEW YORK (Reuters) - Private equity firm Cerberus Capital Management appears close to striking a deal to buy U.S. automaker Chrysler Group, a source familiar with the matter said on Sunday, with an announcement of the pact expected to come as early as Monday.

Several newspapers reported over the weekend that Cerberus took the lead in the bidding for Chrysler, the struggling U.S. auto unit that its parent DaimlerChrysler AG (DCXGn.DE: Quote, Profile, Research (DCX.N: Quote, Profile, Research put up for sale earlier this year.

Chrysler Chief Executive Tom LaSorda would continue to run the company while former Chrysler chief operating officer and Cerberus adviser Wolfgang Bernhard would not have an executive role, but could have a board seat, The Wall Street Journal reported on Sunday, citing people close to the matter.

The paper also said that Daimler would keep a minor stake in the business.

A Cerberus spokesman declined to comment. Chrysler also declined to comment on the auction.

Details on the price or other terms of the offer were not clear on Sunday. A previous offer by billionaire Kirk Kerkorian of $4.5 billion in cash for Chrysler was rejected.

But key to any offer is the company's $18 billion in pension and health-care liabilities owed to Chrysler's United Auto Workers employees.

As in any auction, a deal could fall apart or a different outcome could occur. But Cerberus has emerged as the likely winner, the source said, in a process that included private equity firm Blackstone Group and Canadian autoparts maker Magna International (MECa.TO: Quote, Profile, Research (MGa.TO: Quote, Profile, Research among Chrysler's suitors.