Board clears way for sale of Chrysler

BERLIN — DaimlerChrysler AG's supervisory board formally approved plans to shed its money-losing Chrysler unit on Wednesday, clearing the way for one of Germany's oldest carmakers to re-enter the market as a streamlined Daimler AG.

The decision by the board, the equivalent of a U.S. board of directors, came two days after the company announced plans to sell an 80.1 percent stake in Chrysler to the private equity firm Cerberus Capital Management LP.

The 5.5 billion euro ($7.45 billion) deal unravels a $36 billion takeover from 1998, an attempt to create a global automotive powerhouse. The future Daimler AG will retain a 19.9 stake in Chrysler.

Analysts say the German company will do much better when it sheds most of its American arm, which is expected in the third quarter.

Sal. Oppenheim lifted its price target for the company's shares, noting that "without Chrysler, Daimler is set to be much more profitable, to command a better risk profile and hence to become a much more attractive company."

Worldwide sales for Daimler's flagship Mercedes Car Group were up 2 percent for the January to April period of 2007, led by strong demand for its main S- and E-class models, along with the G-class sport utility vehicle line.

DaimlerChrysler CEO Dieter Zetsche said he would be able to focus all his energy on the luxury brand and pay more attention to the company's truck group, the Wall Street Journal reported late Wednesday.

"The pure focus on the premium market is an easier task to fulfill rather than splitting my time," it quoted Zetsche as saying in an interview.