Possible buyer holds big stakes in auto industry
Cerberus Capital Management, the New York private equity company poised to rescue Chrysler Group, gets its name from one of Greek mythology’s most menacing characters: the three-headed hound that guarded the gates of the underworld. Few made it past the creature.
Auto industry watchers might draw a few comparisons. Cerberus has been on an aggressive campaign to snatch up distressed companies -- including some in California, amassing a big chunk of 50 companies that generate more than $60 billion in annual revenues.
“They’ve been very active,” said David Cole, chairman of the nonprofit Center for Automotive Research in Ann Arbor, Mich. “They’re a player. They know the auto industry and they know what has to be done.”
Last year the company bought a 51% share in GMAC, General Motors Corp.’s auto financing arm. It also owns interests in auto parts companies GDX Automotive Inc. and Peguform Group. In March it agreed to buy beleaguered Tower Automotive Inc. for $1 billion.
Cerberus recently hired Chrysler’s former Chief Operating Officer Wolfgang Bernhard to help in its bid for the automaker.
Sources said Bernhard would retain a seat on the board. Kenneth Leet, a former Goldman, Sachs & Co. partner and strategic advisor to Ford Motor Co., is president of Cerberus’ European division.
“They’ve always been, in my mind, the leading candidate,” said auto industry analyst David Healy of Burnham Securities. “It’s an investment company with deep pockets, and they’ve retained a lot of pretty capable auto talent.”
Private Equity International magazine this month ranked Cerberus Capital Management as the 34th-largest private equity company, raising $6.1 billion in capital in the last five years.
Cerberus also has significant holdings in Albertsons, Mervyns, Formica Corp. and Spyglass Entertainment, a film company whose production credits include “The Sixth Sense,” “Memoirs of a Geisha” and the upcoming “Evan Almighty.”
The firm was founded in 1992 by Stephen Feinberg, who rarely gives interviews and, according to reports, is somewhat reclusive. When the newsletter Corporate Financing Week tried to give him its award for top personality last year, he didn’t show up to accept it and the publication was given a limited description -- that Feinberg has a mustache.
Cerberus has drawn praise for pushing convergence between hedge funds and private equity. At the time Corporate Financing Week recognized Feinberg, one deal maker said: “It’s a hybrid hedge fund-private equity firm-investment bank. They are one of the most active middle-market lenders and probably the only large hedge fund that competes with the mega-buyouts at their own game.”
Former U.S. Treasury Secretary John W. Snow is Cerberus chairman. Former Vice President Dan Quayle is head of Cerberus’ global investment section.
martin.zimmerman@latimes.com
