Sept. 24 (Bloomberg) -- Daimler AG, the world's second- largest maker of luxury cars, is in talks with buyout firm Cerberus Capital Management LP to sell its remaining stake in former U.S. arm Chrysler LLC.

Cerberus said it approached Daimler about acquiring the German automaker's 19.9 percent holding in Chrysler. Neither Cerberus nor Daimler gave a timetable or the value of any deal.

A sale would sever the last Chrysler ties for Daimler, which sold 80.1 percent of the third-largest U.S. automaker to Cerberus in August 2007 as losses mounted. Chrysler continues to damp Daimler's earnings, erasing 373 million euros ($548 million) from second-quarter profit. Daimler bought Chrysler in 1998 for $36 billion.

``It would be a surprisingly positive development, though we're not talking about a lot of money here. It would be close to zero,'' said Juergen Pieper, an analyst at Bankhaus Metzler in Frankfurt, who rates Daimler a ``weak buy.''

Daimler, the owner of Mercedes-Benz brand luxury cars, aims to exit the Chrysler holding within a few weeks, Manager-Magazin reported today, citing people it didn't identify. Daimler doesn't plan to pay New York-based Cerberus to take the stake and wants compensation for supporting Chrysler's sales in Europe, the German magazine reported.

Industrial Ties

``We are currently in discussions,'' Cerberus spokesman Peter Duda said. ``In the event of a successful transaction, all existing industrial relationships between Daimler and Chrysler would continue.''

Thomas Froehlich, a spokesman for Stuttgart, Germany-based Daimler, declined to comment beyond a DGAP news wire statement confirming the talks. Chrysler spokeswoman Shawn Morgan declined to immediately comment.

Daimler sold the majority interest to Cerberus in exchange for a $7.4 billion investment in Chrysler. Daimler also agreed to continue sharing technology with the Auburn Hills, Michigan- based automaker, including access to its BlueTec diesel engines and hybrid, gas-electric powertrains.

Daimler wrote down the value of its Chrysler stake from 916 million euros at the end of 2007, to 171 million euros at the end of June as the automaker's fortunes declined.

Daimler granted Chrysler a $1.5 billion loan in June, fulfilling a condition of last year's stake deal.

Chrysler sales are down 24 percent through August as customers shied away from a lineup that relies on light trucks for 72 percent of its deliveries.

Daimler fell 41 euro cents to 38.31 euros in German trading today. The shares are down 42 percent this year. Bayerische Motoren Werke AG is the biggest maker of luxury autos.

To contact the reporters on this story: Chris Reiter in Berlin at creiter2@bloomberg.net; Mike Ramsey in Southfield, Michigan, at mramsey6@bloomberg.net

Last Updated: September 24, 2008 14:11 EDT