GM needs to double earnings to repay taxpayers 18 Aug 2010 That s if the carmaker, which filed for its IPO on Wednesday, is valued at the same earnings multiple as Ford. GM has advantages, such as far less debt. But operationally it still lags its rival. Until that changes, GM doesn t merit a valuation that would make Uncle Sam whole.
GM CEO shift looks like more management on the fly 12 Aug 2010 Carlyle executive Dan Akerson is probably a better longterm solution than Ed Whitacre. But the surprising and clumsy announcement, on the eve of an IPO filing, furthers the impression that this company isn t quite ready for prime time. That could hurt returns for Uncle Sam.
GM IPO should borrow from European privatizations 4 Aug 2010 These used incentives and guarantees to persuade the public to buy firms denationalized in the 1980s and '90s. Adopting such tactics would allow the U.S. to sell a big chunk of its stake in GM to taxpayers and avoid potential charges of favoring Wall Street at their expense.
As ex-bankrupt, GM deserves cautious IPO interest 3 Aug 2010 Companies that exit bankruptcy and trade publicly can significantly outperform the market. Yet around a third fall back into Chapter 11, mainly because they still have too much debt. GM will have a clean balance sheet but Uncle Sam's involvement may be the key swing factor.
Control freak bosses finally get buyout benchmark 30 Jul 2010 Car parts maker Magna is paying its chairman, Frank Stronach, $1 bln to relinquish voting control, setting a bar for the likes of the Redstones, Fords and Murdochs. Breakingviews imagines an advisor counseling supervoting shareholders on how much their votes could be worth.
U.S. lawmakers need a dose of what’s good for Ford 23 Jul 2010 Alan Mulally, the automaker's CEO, has turned a firm that had middling products, crippling debt and huge employee liabilities into a popular brand with better U.S. earnings than a decade ago. Politicians in DC and Michigan can only wish for similar success fixing their problems.
GM walks tightrope on $3.5 bln AmeriCredit buy 22 Jul 2010 The U.S. automaker is jumping back into captive lending while trying not to upset the government or overburden its balance sheet. AmeriCredit fills gaps in leasing and subprime finance. But GM is paying a punchy price for the lender and needs to stay focused. It's a fine line.
Tomkins faces final break-up after buyout 19 Jul 2010 A $4.5 bln takeover by a Canadian consortium marks the last rites for the oncefeared UK conglomerate. Stripped down to car parts and building materials, the group has struggled during the downturn. The leveraged takeover should provide the catalyst for finally breaking it up.
GM boss hits on the ultimate skin in the game 14 Jul 2010 Ed Whitacre suggested banks use their underwriting fees to sell discounted cars to their employees. While gimmicky it's an amusing way to tie bankers more fully to their client's success. But without enough takers, it could turn a firm's stock market debut into a shambles.
Abertis bidders scheme to square debt circle 9 Jul 2010 The bidding consortium for the Spanish motorway group will have to make do with 2 bln euros less debt than originally envisaged. But the current core shareholders, who are also part of the consortium, want to extract cash from the 12 bln euro operation. There may be a way.
Tesla loses fast lane traction 7 Jul 2010 The electric sportscar maker s shares now trade below last week s IPO price and have halved from their postoffering peak. Though out of top gear, the valuation still looks punchy. GM should take note when it does refloat, it badly needs its shares not to lose momentum.
Abertis LBO would be financial engineering feat 7 Jul 2010 The Spanish infrastructure group's core shareholders could extract 3.6 billion euros while retaining control. If they pull it off still a big if it would be a neat financial trick.
GM’s innovation drive looks uphill 6 Jul 2010 The governmentowned automaker has set up a $100 mln investment fund to tap new technologies and generate profit. Corporate venture capital divisions can be a creative way to outsource research and development. The odds of spawning anything but losses, however, look steep.
Abertis 25 bln euro buyout talk calls up memories 5 Jul 2010 The two largest shareholders in the already leveraged motorway operator Abertis are reportedly studying a possible LBO with buyout house CVC. Just like old times? Well, wait to see if the group manages to raise piles of debt in Spain. This won't be an easy deal to pull off.
Auto sales defy positive statistical trends 1 Jul 2010 June numbers show annual U.S. sales stuck in the low 11 mln range. But ageing vehicles, low scrappage rates and 2 mln new drivers a year suggest sales should take off. If only customers weren t so jittery about the economy. That makes gauging a rebound nigh on impossible.
Ford’s debt deal spreads the love 30 Jun 2010 The automaker is paying off $3 bln of healthcare debt early, soon after repaying a similar amount of loans. That keeps the union and the banks happy. And it s good news for shareholders, too. Using cash to reduce liabilities reduces the chances of a dilutive stock issue.
Not just anything can ride markets like Tesla 29 Jun 2010 The unprofitable electric automaker s public trading debut was a rare hit. That might embolden General Motors and others to push ahead with IPOs. But Tesla s a tech play in a growth industry it leads. Absent such a good story, or buoyant markets, the pace will be hard to match.
Get ready for EBITDAPO 28 Jun 2010 That s how bankers are valuing General Motors planned share sale. The metric is usually used for distressed firms PO stands for pensions and other obligations like healthcare. Wheeling it out for GM s IPO is a reminder that last year s bankruptcy was not a cureall.
There’s no reason to rush a GM IPO out the door 22 Jun 2010 The CEO is pressing full speed ahead on getting the government out of the carmaker. But GM, with its troubled European exposure and middling domestic performance, doesn t look ready for public consumption. Better to wait than risk a botched debut with a halfbaked story.
Since when is an IPO a Wall Street loss leader? 18 Jun 2010 Usually it s the other way round. But not in the General Motors stock sale. The 0.75 pct underwriting fee leaves little room for error and is less than the banks can earn on the automaker s loans or bonds. Luckily for Wall Street, GM s topsyturvy deal is probably a oneoff.