Deals du Jour

Abu Dhabi sells 3.5 billion pounds of shares in Barclays, making a handy profit, and sending the stock down well over 10 percent. In another share sale, wind turbine maker Gamesa is suspended after Iberdrola offloads 10 percent of the company in the market. Otherwise, cars still dominate: GM has filed for bankruptcy, Germany is to pay bridge financing to Opel today and a U.S. judge said overnight the sale of Chrysler will be effective on Friday. Here are today’s top deals headlines.

And in the newspapers:

British publishing group Pearson is in talks with Prisa over the possibility of buying a stake in Santillana, the Spanish media firm’s publishing house and market leader in school textbooks in Latin America, the Financial Times reported.
Prisa could be looking to sell up to 30 percent of the unit in a 315 million pound deal. Other bidders include Cengage Learning, Oxford University Press and Infinitas Learning, the paper says.

Citigroup Inc told about five former top executives they will not be paid tens of millions of dollars in promised severance payouts, the Wall Street Journal cited people familiar with the matter as saying.

France’s Carrefour is close to buying a stake in a unit of India’s Pantaloon Retail, the Business Standard reported.

French carmaker Peugeot declared itself open to any form of alliance amid turmoil in the car industry as long as the Peugeot family maintains a core presence, Peugeot Citroen PSA supervisory board chairman Thierry Peugeot, Les Echos reported.

GM, Rewind before hitting fast forward

A quarter century ago, when GM was first experimenting with Toyota-style lean manufacturing, then-GM board member Ross Perot famously complained that “Revitalizing GM is like teaching an elephant to tap dance.”

gm1Now it’s the Obama administration’s turn to call the tune for GM as it attempts to remake the 100-year-old company in a fast-track bankruptcy process it aims to complete by August.

The goal: $50 billion in taxpayer funding to turn around GM and not a dime more.

No deal on Opel as GM needs more cash – again

opel1What’s surprising: Talks for General Motors Corp’s Opel failed to yield a deal.

What’s not-so-surprising: GM needs cash. Again.

Talks that ran all through Wednesday night to sell Opel to one of four final bidders narrowed the race to two but failed in sealing a deal. German ministers, emerging in the early hours of Thursday morning after more than 12 hours of talks, blamed GM and the U.S. Treasury for the failure.

Why? Because GM, the ministers say, shocked participants by announcing it needed 300 million euros ($415 million) more in short-term cash from the German government to  keep Opel operating.

Tesla sticker shock?

Elon Musk

With highly touted plans for a new electric car in jeopardy, an overseas investor steps in to provide new capital and a much-needed endorsement.

GM? No, Tesla.

Remarkably, the terms of German automaker Daimler AG’s 10-percent stake in Tesla may have also helped the Silicon Valley electric-car start-up inch closer to GM in value.

Daimler’s vague disclosure of its purchase price as  “double digit million dollar” means Tesla is valued at a minimum of $100 million.
That would make Tesla, which was founded nearly six years ago, about one-eighth the size of 100-year-old GM.

Driven to the brink

fritz1In Detroit, it is a fact of life that you are what you drive.

GM and Chrysler have staked their future — and some $20 billion of taxpayer-backed loans — on the idea that they can reinvent themselves as lean, green and mean manufacturers of small and fuel-efficient cars and electric-drive vehicles.

That’s a vision that resonates with the Obama administration, which has announced an ambitious target of putting 1 million plug-in hybrid cars like the much-touted Chevy Volt on the road by 2010.

But some of Detroit’s highest-profile auto executives are still driving like its 1999. Their rides still harken back to the era when they were the kings of the road.

GM: Before any bankruptcy, the backlash

USA/For weeks, General Motors has been working to prepare its customers, suppliers and employees for the hard landing most analysts see waiting at month end: a bankruptcy filing.

The embattled automaker’s drop dead date is Monday, June 1 when it has $1 billion in bond payments due that it plans to skip.  Five days earlier, on May 27, GM learns how much of some $27 billion in bonds it was able to retire in exchange for its devalued stock.

Analysts and restructuring experts see little chance GM will meet its target of wiping its balance sheet almost clean of bond debt. That would leave one option: a Chapter 11 filing.

Chrysler, an American Bankruptcy

CHRYSLER/DEALERSChrysler’s private equity owners Cerberus, or at least their lawyers, will arrive at bankruptcy court in Manhattan later this morning. Yesterday, President Obama assured hand-wringing industrialists that the process would be quick and efficient and that Chrysler would emerge a leaner, meaner machine.

To some degree, one can look at the U.S. airline industry in the same light. But that industry, while “saved” through bankruptcy numerous times, is today a shadow of its former self, and remains haunted every so often by the threat of a return to that business mortuary for rebirth.

But a lot has changed since the crisis mad bankruptcy court so busy. The key for the new age of court-run restructuring is to sell major assets before going to court — effectively leaving creditors to haggle over the dregs. Some disgruntled creditors contend that the quick bankruptcy promised by Obama is being engineered in such a way because the sales would never make it past a judge.

Big car. Smaller and smaller offers.

HummerThe number of bidders for GM’s Hummer brand has narrowed down to three, with current offers ranging from $100 million to $200 million in cash, in addition to other commitments, sources told Reuters.

That would be a further comedown from what was already a comedown — investment bankers initially estimated that the iconic gas guzzler could fetch between $500 million and $750 million, considering it a distressed asset.

Last month, GM turned back a Kentucky industrialist with a lowball bid, who had also put together plans for new powertrain options for Hummer, including a hybrid version of the H3 that would double its fuel economy from the current 14-to-18 miles per gallon, a source said.

Road Shows

AUTOSHOW/At the Geneva auto show, General Motors is getting down to the business of convincing European governments to pump state funds into its Opel/Vauxhall arm. Europe has long been considered one of the more profitable corners of the globe for GM. The company is talking about closing three plants there and warning officials that there will be liquidity problems at Opel/Vauxhall early in the second quarter if they don’t pony up.

Leveraging similar tactics it used in the U.S., GM is telling European leaders that the aid it needs — whatever the final price tag — will cost less than an Opel/Vauxhall failure. This is an argument likely to find more traction in Geneva than it did in Washington, where socialism is not a word used in polite company.

Meanwhile, the great race for global funding is picking up speed. Toyota, the world’s biggest auto company, is looking for dollars to keep its loan business competitive in the shrinking global auto market. Ford is again reported to be shopping Volvo in China. At speeds like these, avoiding a huge smash-up before the next big turn would be a miracle.

In other numbers…

JAPAN-STOCKSWhen presented with stupefying numbers, it’s sometimes fun, and usually cathartic, to boil them down into more tangible figures, give them household values and nod our heads in wonder. Late last week, when word that AIG’s quarterly loss would come in at $60 billion or thereabouts, we started hitting the division key just to make ourselves feel better. Turns out, AIG lost $61.7 billion, but what’s another $1.7 billion when taxpayers are working up a $1 trillion borrowing spree?

AIG’s loss per day in the fourth quarter was $670.2 million. That’s a $27.9 million hourly loss. Divide again and again and you get $465,000 per minute and $7,750 a second. Though not really a GAAP measurement, assume for a moment that at rest a standard human breath takes about two seconds. So AIG’s quarterly loss was about $15,000 per life-giving gulp of air.

The heart of a Ruby-throated Hummingbird, the most common species of Hummingbird in the eastern half of North America, beats 250 times per minute at rest, so that’d be $1,860 per Hummingbird heartbeat of quarterly losses for AIG. When it’s feeding, the hummingbird’s heart beat races up towards 1,200 or more beats per second, deflating the value of each itty bitty beat down to around $274.