The Great American IPO?
We (the taxpayers) paid some of the $50 billion to bail General Motors out of its bankruptcy misery last year. Now, the former American industrial icon is going to launch one of the biggest U.S. IPOs of the decade.
According to estimates by Independent International Investment Research, GM’s initial offering would raise $12 billion, higher than any U.S. IPO this year and exceeding all over the last ten years, except for Visa’s offering in 2008 and AT&T Wireless in 2000.
The Wall Street Journal said this morning that GM is close to picking JPMorgan and Morgan Stanley as lead underwriters for the IPO. The U.S. Treasury, which owns a 61-percent stake in GM, said on Thursday that the timing would be decided by GM, based on market conditions.
Creating an appetite for a company that lost more than $80 billion in four years and has more than $14 billion debt, is not going to be an easy sell. Still, with GM swinging back to profitability and auto sales showing a rebound, the former backbone of industrial America coud just be the next Great American IPO.
DealZone Daily
Italy’s Ferrero has ruled out a rival bid for Cadbury Plc, clearing the way for Kraft Foods to complete its 11.7 billion-pound ($18.9 billion) proposed takeover of the British confectioner. Fellow chocolate maker Hershey has already said it has no intention of bidding for Cadbury, so with Nestle already ruled out, Kraft appears on course to complete its recommended bid by the deadline of February 2.
US investment group Blackstone is examining the possibility of entering the UK banking market, its chief executive Stephen Schwarzman said on the sideleines of a conference in Saudi Arabia, confirming earlier reports by Reuters and other media. He said that opening a bank in the UK would not represent a major change in strategy for Blackstone.
And from other media:
CPA Global, the patent and legal services group, is set to complete on Thursday a management buyout financed by Intermediate Capital Group, the Financial Times reported.
Saab Automobile is set to win a stay of execution from General Motors as the US carmaker closes in on a deal to sell its Swedish unit to Spyker Cars of the Netherlands, the Financial Times reported. Several people close to the negotiations told the newspaper a provisional agreement could come as soon as today.
The View From The Dealer Floor
Major automakers don’t sell cars to American consumers; they sell to dealers. And the biggest U.S. dealership chain by a wide margin is Fort Lauderdale, Florida-based AutoNation, which sold over 440,000 new and used vehicles last year.
So when AutoNation CEO Mike Jackson talks, auto executives listen — or so you would think.
In an interview with Reuters, Jackson said Detroit automakers had largely ignored his warnings over the past decade that the U.S. industry was headed for a crisis.
“I think I was usually able to reach an intellectual agreement on where the industry was headed. Where we disagreed was how much time we had to get there. On that, even I was wrong. Time was up,” Jackson said. Jackson thinks GM and Chrysler can be fixed. But he also thinks Washington should let either or both fail if their current turnaround effort backed by $60 billion in taxpayer funds falters. Here are excerpts from the interview and Jackson’s view of where GM, Chrysler, Ford and their rivals stand now in the marketplace:
Q: Are GM and Chrysler capable of change?
A:I think they had a near-death experience. When you really get down to the point where we either get this done or we won’t exist anymore, then it happens. …My sense is that absolutely Sergio (Marchionne) is providing leadership at Chrysler and (Fritz) Henderson at GM. It’s under way, and it’s going to happen. Q: You’re looking to buy Ford and GM dealerships. Why is that?
A: We always bet on the biggest, broadest brands. Now we’ll take a look if the pricing and the opportunities are right. We love Chevy and we love Ford. Those are the brands that will succeed in the future. Those are the brands that are going to get the majority of the product and marketing dollars from those companies. They’re also the broadest brands. You can sell everything from Chevy from a Corvette to an Aveo. It’s unbelievable how well accepted and how approachable those brands are for the American consumer.
Come on.
Gone are the days of planned obsolescence where you traded out before the cost of maintenance hit you. Not that long ago warranties for 3y/30k miles were replaced with 10/100. The paint doesn’t even chip anymore.
The secondary warranty market just exacerbates the ever increasing spread between when an auto is replaced for new.
People got used to 2 year leases but the days of $79 a month (1997) are over. Not that long ago a BWM was $400 a month, now it’s a Corolla and a 48 month lease -not that you can get approved for credit on either.
Face it, the market has changed and it’s due to more than a economic downturn.
