Friday, May 18, 2007

Sale will give Cerberus stake in finance units


GM CEO Rick Wagoner says GMAC and Chrysler Financial might cooperate after Chrysler is sold.

There may be opportunities for financing companies GMAC and Chrysler Financial to cooperate once they share a private equity majority owner, General Motors Corp. Chief Executive Rick Wagoner said Thursday in Detroit.

Private equity firm Cerberus Capital Management, which announced this week its intent to purchase 80.1% of the Chrysler Group, including Chrysler Financial, owns 51% of GMAC. Cerberus bought its majority stake in GMAC from GM late last year. GM owns the rest.

"I think it's possible that there would be opportunities" for Chrysler Financial and GMAC to work together, Wagoner said.

Wagoner spoke to the women's business group Inforum. His comments came as industry watchers speculate about how Cerberus plans to make money from the Chrysler Group and whether the sale might whet private equity appetites to buy other automakers.

Certainly there are "potential synergies" between the two financing arms, Wagoner said, but it's too early to speculate on how the companies would maximize those opportunities.

"Nothing has been specifically presented to us and we haven't developed any ideas," Wagoner said.

BNP Paribas analyst Bradley Rubin expects to see plans for the financial units to cooperate in early 2008.

But he doesn't expect the Chrysler sale to lead to private equity takeovers of GM or Ford Motor Co. For those deals to make sense, he said, the automakers would have to win more union concessions. "I just don't see it," he said.

Wagoner also said he doesn't expect to see a "mad rush" of private equity investors to take over publicly traded auto companies: "I don't see us moving that rapidly to a private ownership structure."

No comments: