In July 1997, Bob Eaton, then chief executive of Chrysler, delivered a speech at the car company’s headquarters in Auburn Hills, Michigan. “I think there may be a perfect storm brewing around the industry today,” he said, having just read Sebastian Junger’s book, The Perfect Storm. “I see a cold front, a nor’easter and a hurricane converging on us all at once.” The cold front was overcapacity, the nor’easter was changing consumer taste in cars and the hurricane was the environmental movement.

A year later in May 1998, Chrysler announced that it had sought shelter in the embrace of Daimler, the German car giant. Mr Eaton and Juergen Schrempp sought what the Daimler chief executive called “a merger of growth and a merger of unprecedented strength.”

Yesterday, DaimlerChrysler ended one of the most draining and destructive mergers in modern corporate history. Under the terms of the deal, Cerberus, the private equity group chaired by the former US Treasury secretary John Snow, is paying a headline figure of $7.4 billion for 80 per cent of Chrysler. In reality, though, Daimler gets $1.3 billion, but has to pay a $400 million loan to the car business as well as cover $1.6 billion in negative cashflow over the next few months.

In short, the German group is paying $650 million to get rid of the American business. It is no doubt worth it: the German company gets to renew its focus on Mercedes, shelve its responsibility for $17 billion in healthcare liabilities and get its name back, Daimler AG.

The final unravelling of DaimlerChrysler, a $37 billion deal that was, at the time, the biggest transatlantic merger in history, could not have come at a more opportune time. In the midst of this M&A boom, it is a valuable reminder that a transformative deal will not save a business from fundamental changes in an industry. Quite the opposite, it can distract a company at a crucial time: BMW has outperformed Daimler for the past decade.

The Cerberus investment poses a new kind of test for private equity as well as plenty of questions for the carmaker.

Chrysler has become the first of the big Detroit carmakers to fall into private hands. While the logic of Cerberus’ interest in Chrysler’s auto finance business is clear – Cerberus already has a 51 per cent stake in General Motors’ auto finance business and clearly has competence in that kind of financial engineering – it now has to prove that it has the debt capacity and the depth of management to handle labour relations, welfare costs, industrial design, product marketing, environmental pressures and global competition in the most difficult industry in North America. The storm rages on.

Just deserts for Big Brother

Celebrity Big Brother is the place where has-beens make desperate bids to resuscitate their careers. So there is something strangely fitting about the fact that the company that created the programme should have fallen into the hands of Silvio Berlusconi, the former Italian prime minister.

Endemol, which also makes Deal or No Deal, has been bought by Mr Berlusconi’s Mediaset alongside Goldman Sachs and John De Mol, the founder of the company, for €2.6 billion (£1.7 billion). That is a good deal less than the €5.5 billion that Telefónica, the Spanish telecoms group, paid for it at the height of the media and technology frenzy of 2000.

The consortium is paying for Telefónica’s 75 per cent stake, thereby valuing Endemol overall at just a touch more than the €3 billion that bankers at Lehman Brothers had been suggesting the business might fetch. And the Spanish may well feel that they have got a decent price for it: Mr Berlusconi et al have, after all, paid nearly a third more for the business than it was worth in the midst of the Big Brother scandal earlier this year.

The reality TV, though, has only just begun. Senior Endemol executives had been part of a rival consortium looking to buy the business. Some are now expected to leave. And others at the company have been at odds with Mr Berlusconi’s Mediaset, which poached the Italian host of Deal or No Deal to front a rival show.

The really interesting element of the purchase is the return of John De Mol, the man who invented Big Brother and has played no small part in the transformation of television everywhere. The company has traded off its extraordinary formats for more than a decade. It sorely needs to replenish its creative pipeline.

No conflict

Sleaze disgraces government and if politicians undermine the integrity of public service for personal profit they should be held to account.

But the latest allegations of conflict of interest against Hilary Benn are preposterous. The International Development Secretary has been forced to explain the fact that he has £233,000 of shares in UBM, the business information group. This company owns PR Newswire, which electronically distributes press releases for small businesses, large corporations, government ministries and nongovernment organisations around the world.

The £2,000-a-year contract that PR Newswire gets from the Department for International Development is a tiny, tiny fraction of its business. The fact that DfID renewed the deal while Mr Benn has been the minister there was, frankly, a formality.

Mr Benn may have fallen short as an MP in declaring his shareholding in the register of member’s interests, but he has been perfectly clear as a minister. More to the point, there is no question here of conflict of interest: he was not involved in the PR Newswire agreement with DFiD, nor would it have made the most minuscule difference to the UBM shareprice.

There is a bigger point here about punishing politicians for taking an interest – either intellectually or financially – in business. Public officials who abuse their position should be hounded out of office, but it does not serve either British industry or the political system to have Members of Parliament hounded out of legitimate share ownership.

— Money can buy you love. The CBI has recruited five private equity houses, wants more and has made a gushing tribute to the fast-growing sector in its evidence to the Treasury Select Committee. But there is better. Users of the Trustnet website, polled on which alternative investments they would favour in an FSA-approved fund of funds, have rated private equity twice as good as wine and three times as popular as horses. That is real love.

james.harding@thetimes.co.uk

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