I don't think this is going to be the last time that a potential private equity deal is pulled, much to the disappointment of arbs. As I've been covering on BloggingBuyouts, I think the credit situation in the United States is quickly turning sour. Many professionals in the fixed income space who I talk to constantly talk about not being paid enough interest to justify the risks that they are taking. As a result, I believe private equity firms are going to have much more trouble in borrowing the money they need to continue their leveraged buyouts. I think arbs are going to face more pain in the future.
Merger arbitrage is getting scary
I don't think this is going to be the last time that a potential private equity deal is pulled, much to the disappointment of arbs. As I've been covering on BloggingBuyouts, I think the credit situation in the United States is quickly turning sour. Many professionals in the fixed income space who I talk to constantly talk about not being paid enough interest to justify the risks that they are taking. As a result, I believe private equity firms are going to have much more trouble in borrowing the money they need to continue their leveraged buyouts. I think arbs are going to face more pain in the future.
DaimlerChrysler finally admits Chrysler is for sale
DaimlerChrysler AG (NYSE: DCX) finally admitted that its trying to sell its money-losing Chrysler unit.
Speaking at the company's annual meeting, Chief Executive Dieter Zetsche said the automaker was "talking with some of the potential partners who have shown a clear interest," according to media reports. He declined to provide specifics, saying it would be "irresponsible."
This is good news for Daimler's shareholders. One told Bloomberg News that he would be "grateful" if the company got rid of Chrysler. Shares of the automaker have soared 25 percent since February 14 when it said it might get rid of Chrysler.
The Blackstone Group and Centerbridge Capital Partners plan to bid for the automaker, Bloomberg says, adding that other potential bidders include Magna International, an auto parts maker, and Cerberus Capital Management.
Unfortunately, the automaker's problems go beyond just money. Like the other members of the Big 3, Chrysler is continuing to lose marketshare to its Japanese rivals. That situation isn't going to change anytime soon.
BloggingBuyouts is provided for informational purposes only. Nothing on the service is intended to provide personally tailored advice concerning the nature, potential, value or suitability of any particular security, portfolio or securities, transaction, investment strategy or other matter. You are solely responsible for any investment decisions that you make. The contributors who provide the content of BloggingBuyouts may, from time to time, hold positions in the securities discussed at the time of writing and they may trade for their own accounts. Such holdings will be disclosed at the time of writing. By using the site, you agree to abide to BloggingBuyouts' Terms of Use.
