FRANKFURT - Private equity firm Cerberus will buy a majority of DaimlerChrysler's Chrysler Group for $7.4 billion.

Cerberus Capital Management (CBS.UL) gets an 80.1 percent stake in Chrysler and its related financial services business, DaimlerChrysler said on Monday. Tom LaSorda, president and CEO, Chrysler Corporation LLC stated, “Cerberus is the right strategic buyer for Chrysler, with a long-term commitment to Chrysler's growth and success. They are committed to working constructively with both union leadership and Chrysler's management team to help Chrysler realize its full potential.”

The deal, months in the making and set to close in the third quarter of the year, puts a major U.S. automaker in the hands of a private equity group for the first time. Cerberus Capital Management Chairman John Snow said Monday, "Cerberus believes in the inherent strength of U.S. manufacturing and of the U.S. auto industry. Most importantly, we believe in Chrysler."

The German company — whose name will change to Daimler AG if shareholders approve — will contribute another 650 million euros to cover long-term liabilities at Chrysler. It estimated the deal will cut DaimlerChrysler's 2007 net profit by 3-4 billion euros.

Earlier, General Motors Corp. sold a 51-percent stake in its financing arm, GMAC, to a consortium led by Cerberus in a deal worth about $14 billion last year.

“We are confident this transaction with Cerberus will create a standalone Chrysler that is financially stronger, with a winning combination of people, industry know-how, operational expertise and spirit of innovation that will accelerate the company's recovery, and help us regain our position in this competitive industry.” LaSorda said.