Gut Reactions on Chryslerus

This morning’s big news is that Cerberus has agreed to buy Chrysler (or at least most of Chrysler) for approximately $7.4 billion. Of equal import, the deal has gotten the Good Autoworkers seal of approval from the UAW, so any sort of post-agreement battle is highly unlikely.

Three very quick observations, which will certainly be followed by more comprehensive ones later in the day:

1. This is not even remotely the largest-ever buyout, but it will be the most discussed in the past decade. Chrysler is an iconic company, which means every move Cerberus makes will be dissected and used to paint the overall LBO market as either good or evil. For at least a while, Cerberus has become more consequential than Blackstone.

2. This is a real old-fashioned a buyout. Single sponsor buying a troubled industrial company, with most of its investment going toward working capital.
3. I wonder how many times Cerberus pros have thought to themselves: “Are we sure we want to buy into a company that Wilbur Ross declined to even look at?”