DealZone

from Commentaries:

China picks European cars off scrapheap

GERMANY/Chinese carmakers are seeking to step into the gaps left by U.S. companies in Europe -- but while acquisitions may give them access to badly-needed technical know-how, global brands and exposure to new markets, the question is whether they have learnt from past failures.

With China now the world's largest car market, it's no surprise that Chinese carmakers -- which have few if any really solid brands within their home market -- want to start making more of a mark.

In theory, foreign acquisitions offer a quick way to do so. Meanwhile the credit crunch has thrown world-renowned but now distressed car marques such as Volvo, Opel or Saab onto the block at what look like rock-bottom prices.

The worry is that Chinese carmakers haven't always found it plain sailing abroad. SAIC Motor Corp is still feeling the pain of buying into Ssangyong Motor Co of Korea. Ssangyong has struggled to compete as South Korea's smallest carmaker, failing to develop new models and running out of cash. A debt-for-equity swap threatens to slash the Chinese company's holding in the South Korean carmaker from just over 50 percent to around 10.

Chinese companies have had more success when they have simply acquired technology and taken it back to China. SAIC had much more success when it bought Britain's MG Rover. In that case, SAIC closed most of the UK manufacturing and used the know-how to launch a mid-range sedan called the Roewe. This has proved successful in China.

‘New GM’ Gets a Visit from a Shareholder

obamalordstown1 GM’s Lordstown, Ohio assembly plant has become a symbol of both GM’s hard times and its best hopes for a turnaround after a $50 billion federal investment. A recent bump in sales because of the government’s “Cash for Clunkers” program has allowed GM to call back more than 1,000 workers from layoff.   So it was a natural backdrop for a return visit by President Obama, who held a roundtable with workers and then gave a stump speech from the factory floor for his economic policies and health care reform.   But this is not your father’s GM anymore and nothing about it as clear-cut as it seems — even if you are the leader of the free world and head of the government that holds a controlling stake in the automaker.     At one point, Obama — veering from his prepared remarks — suggested that health-care reform would allow the UAW-represented workers in the audience to negotiate better wages.

“Think about it. If you are a member of the union right now, you’re spending all your time negotiating about health care. You need to be spending some time negotiating about wages, but you can’t do it,” he said.

 

In fact, the UAW locked itself into a contract limiting wages and changes to health care, without the ability to negotiate with a threat of strike, until 2015. These stands were agreed to by the union at the prodding of the Obama administration, which demanded that union autoworkers accept lower wages — as a condition to the bailout that saved Lordstown — to match non-union workers at Toyota plants in Kentucky and Honda plants in Ohio.

GM driving uphill with new ads

Once upon a time, when $1 million was big money, General Motors spent millions on an advertising campaign on three U.S. television networks featuring the sing-along slogan, “Baseball, hot dogs, apple pie and Chevrolet.”

Powered by the link between Chevrolet and other American loves, GM’s share of U.S. auto sales was 35 percent in 1980. In 2009, GM’s share of the American auto market is a mere 19 percent, as it struggles with a backlash from an unpopular federal bailout and bankruptcy.

Chevrolet is hardly as American as apple pie anymore, but Chevrolet and GM will soon launch an aggressive marketing campaign to change deep-set perceptions of American consumers that GM cars and truck are inferior to imports like Toyota and Honda. The campaign, which will feature new company chairman Ed Whitacre and the slogan, “May the best car win,” will challenge notions of inferior products and will be waged on a myriad of television networks and print publications, but will also employ the Internet.

Opel and shut case?

Just when the baroque machinations surrounding the sale of GM’s European unit seemed like they couldn’t get any murkier, one bidder has taken on the heroic initiative to announce it has won agreement with GM for a deal. Our interview with Siegfried Wolf, the Co-CEO of Canada’s Magna, had the ring of finality to it, but GM has already said it was in agreement with the other bidder, Belgian private equity firm RHJ. The German government is quiet for now, having already said it supports Magna.

According to Magna, GM management agreed in principle to sell it and Sperbank, its Russian partner, a 55 percent stake in Opel. Shortly after the interview ran, GM helped to keep the waters muddy, saying its board will discuss Opel options once it has a financing plan in hand that European governments will support. It did confirm that Magna and Sberbank had presented GM with a revised draft agreement, which it will review over the next few days. If nothing else, the interview appears to tip the balance a bit, but given all the bumps in the road this deal has hit, investors can be forgiven for wanting to wait for the official word.

Can GM get back into Opel?

RHJ International, a bidder for Opel, told a German newspaper it might consider selling Opel back to GM after it does its private equity triage on the European carmaker. “Let us be pragmatic. It won’t work without General Motors,” Leonhard Fischer, RHJ’s CEO, told Frankfurter Allgemeine Sonntagszeitung. It reported Fischer was explicitly not ruling out the option of selling Opel to GM after RHJ had completed its restructuring of the ailing carmaker.

As far as German Chancellor Angela Merkel is concerned, Canada’s Magna is the preferred partner for Opel. The GM Opel Works Council this morning is demanding greater say in the sale of the company. Specifically, it said GM should not be able to buy back a stake in the company. It also flexed a bit of muscle, saying if it doesn’t get a greater say over who ends up owning Opel, it won’t play ball on achieving structural cost savings.

Delphi, CIT test Gov’t boundaries

Lenders to Delphi didn’t spend four years in bankruptcy court just to see it all end in a government-driven deal effectively putting the parts supplier back in the hands of GM. To show their efforts have not been in vain, they are said to be readying a bid for Delphi assets that could challenge the proposed sale to deal with private equity firm Platinum Equity that was brokered by GM and Uncle Sam.

Two people familiar with the discussions say while the bid is being put together ahead of an auction today that could bring the long-defunct company back to corporate life, no terms have been reached.

A rejection of the Platinum deal would represent one of the first and only legal setbacks for the Obama administration’s autos task force in the $50-billion government-funded restructuring of GM in a fast-track bankruptcy, reports the Reuters autos team. With small business lender CIT still expected to file for bankruptcy today, the Delphi dilemma appears as yet another test of boundaries for the Treasury.

from Commentaries:

Bankruptcy-related M&A at 5-year high – more to come?

This week's Thomson Reuters Investment Banking Scorecard shows bankruptcy-related M&A at a five year high.

 

There were five bankruptcy-related M&A deals announced during the week, including the acquisition of venture-backed public company Nanogen by French investment holding company Financiere Elitech for $25.7 million. 

 

So far this year there have been 173 bankruptcy-related deals, the highest level since the same period of 2004 when there were 202.

GM to sell assets to “newco,” future of “oldco” still uncertain

gmA U.S. federal judge has authrorized the sale of General Motors’ most profitable assets to a “new GM,” backed by the government, in a move seen as crucial for the automaker to exit bankruptcy protection.

The decision by Judge Robert Gerber of the U.S. bankruptcy court in Manhattan came after three days of hearings to address the 850 objections to the restructuring plan. In his 95-page opinion, Judge Gerber wrote that the sale would “prevent the death of the patient on the operating table.”

Under the terms of the revised deal, G.M. would sell its best assets, including the Chevrolet, Cadillac, Buick and GMC brands, to a new company owned largely by the American and Canadian governments and a health care trust for the United Automobile Workers union.

Live blogging the GM bankruptcy hearing

General Motors is back in bankruptcy court on Wednesday, seeking approval to sell its choice assets to a “New GM” in a plan to reinvigorate the automaker under U.S. government ownership.

Reuters reporters Emily Chasan and Phil Wahba will be filing updates from the hearing in the live headline box below and on the DealZone Twitter feed.

Live: GM bankruptcy court hearing

GM cleared several of the hurdles on its way out of bankruptcy Thursday at a court hearing in Manhattan. The federal bankruptcy judge gave GM the final ok to tap the rest of its $33.3 billion bankruptcy financing and a lawyer for asbestos claimants withdrew a request for official committee status. Other obstacles including the status of non-union retirees rights to healthcare benefit– are on the agenda for the afternoon. We’ll be filing updates from the hearing in the live headline box below and on our Twitter feed.