GM sets plan to spin off Delphi auto parts unit
TROY, Mich., Aug 3 (Reuters) - General Motors Corp.
said Monday its board of directors approved plans to make its
Delphi Automotive Systems unit an independent publicly traded
company in 1999.
In a move widely anticipated by analysts, GM said it
expects to sell 15-20 percent of the common stock of Delphi, the
world's largest automotive supplier, in an initial public
offering during the first quarter of 1999. The remainder of
Delphi's shares would be distributed to GM's shareholders in what
is expected to be a tax-free exchange.
GM outlined two possible distribution scenarios. Under a
split-off, GM said it would offer Delphi shares in exchange for
GM $1-2/3 par value -- the name of the parent company's shares --
to those GM stockholders who want to participate. GM may also
spin off Delphi shares and distribute them to GM $1-2/3
shareholders on a pro-rata basis. Another possibility is a
combination of the two scenarios.
"Either transaction would create value for holders of GM
$1-2/3 par value common stock," said GM chairman, chief executive
officer and president Jack Smith in a statement.
Current Delphi CEO J.T. Battenberg would be chairman, CEO and
president of the independent Delphi. He said the company will
honor the no-sale, no closure commitments GM made with the United
Auto Workers union last week regarding plants in Flint, Mich.,
and Dayton, Ohio.
In 1997, Delphi earned $1.2 billion, excluding special
charges and including Delco Electronics, on revenues of $31.4
billion. The approximately 200,000 people who work for Delphi
would become employees of the new company. GM will have about
400,000 workers following the separation. |
