GM sets share ratio for Delphi spin-off
DETROIT, May 25 (Reuters) - General Motors Corp. took one of
the final steps in spinning off its supplier unit Tuesday,
announcing a $6.53 billion special stock dividend that grants GM
shareholders 0.69893 shares of Delphi Automotive Systems Corp.
for every GM share they hold.
The spinoff ends the 90-year ownership affiliation of
world's No. 1 automaker and its supply chain. GM hopes the
split will help Delphi grow its business of supplying other
customers, while helping GM become less vertically integrated.
GM plans to distribute 452,565,000 shares of Delphi common
stock -- or 80.1 percent of the company -- to GM shareholders May
28 in the form of a special dividend. Taking the distribution
ratio set Tuesday, the dividend value to GM shareholders is
$14.42 a share, or $6.53 billion.
Once the spin-off is complete Friday, GM said it expected its
stock price to fall to about the value of the remaining Delphi
shares being spun off. Based on Delphi's closing price of
$20.625, GM's stock would fall $14.42. GM closed at $84.625 on
Tuesday, up $1.50.
With $28.5 billion in 1998 revenues, Delphi will be the
36th largest public company in the United States. Last week,
Standard & Poor's said Delphi would become a member of its S&P
500 index.
In February GM spun off 17.7 percent of Delphi in an
initial public offering. GM will put the remaining 12.4 million
shares of Delphi stock it holds, equal to 2.2 percent, in a
Voluntary Employee Beneficiary Association trust previously set
up by GM to fund benefits for retired hourly employees.
GM said it has filed restated financial statements with the
U.S. Securities and Exchange Commission to reflect the fact that
Delphi, the world's largest auto parts supplier, is no longer a
part of its business.
Separately, Delphi Chief Financial Officer Alan Dawes told
CNBC Tuesday he was comfortable with the First Call Corp.
analysts' consensus earnings estimate of $1.85 a share for 1999.
"They look to be in the ballpark," said Dawes.
((Detroit Newsroom, 313-870-0200))
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