After lengthy negotiations Daimler has finally separated itself from Chrysler, with the announcement this week that the German company will return its remaining 19.9 percent stake in the struggling automaker.

Chrysler, Cerberus Capital Management (the current majority stakeholders in Chrysler) and the US Pension Benefit Guaranty Corporation came to an agreement with Daimler on Monday. The move marks the end of the Daimler Chrysler association which began when Daimler purchased Chrysler in 1997.

As part of the agreement, Daimler will be required to contribute USD$200 million to Chrysler’s pension plan from 2009 until 2011. Daimler will also have to forgo any loans due from Chrysler.

Daimler currently values its stake in Chrysler at $0, a long way down from an estimated value of over USD$2 billion in 2007.

Cerberus Capital Management has been trying to bring Daimler’s association with the brand to a close for a number of months now. The US Government’s deadline for Chrysler’s viability plan is just days away however and it seems the additional pressure has been enough to bring both parties to an agreement.