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17/11/2005, 21h18
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GM Hits The Wall
By Michael Ellis and Sarah Webster, Detroit Free Press
Nov. 11--General Motors Corp. is unraveling -- fast.
Its stock price plunged to a 13-year low on Thursday after the latest in a string of financial problems dismayed shareholders once again.
Wall Street experts say the unthinkable is more likely than ever: Michigan's largest company could be bought by a corporate raider like Las Vegas billionaire Kirk Kerkorian, forced to file for bankruptcy, or both.
Getting GM out of bankruptcy could require the same drastic cost-cutting that is wracking Delphi Corp., its largest parts supplier, right now.
Lower wages, less generous benefits and fewer jobs would not only be devastating for the automaker's 142,000 U.S. employees. It would hurt everyone who makes parts for GM cars and trucks, sells furniture and homes to GM workers, or treats their children for the flu.
Almost everyone in Michigan has a stake in GM's future.
But the facts are unavoidable: You can now buy every single share of GM stock for a mere $13.5 billion, or about $3.5 billion less than last spring.
Experts say a buyer like Kerkorian could sell GMAC (the division that loans money for everything from cars and homes to Manhattan skyscrapers) for about $12 billion, take GM's $19 billion in cash and stock, put the automaking business into bankruptcy, and walk away with an astounding profit.
In the world of high finance, $13 billion is not a large amount. Remember that Kerkorian was willing to pay $22.8 billion for Chrysler Corp. when he launched his unsuccessful takeover attempt of that carmaker in 1995.
There is a growing sense that GM Chairman and CEO Rick Wagoner, as well as the company, is running out of time.
Copyright 2005, Detroit Free Press
Distributed by Knight Ridder/Tribune Business News.
Subscribe to MPH Magazine
Join a discussion about this story
GM Hits The Wall
By Michael Ellis and Sarah Webster, Detroit Free Press
Nov. 11--General Motors Corp. is unraveling -- fast.
Its stock price plunged to a 13-year low on Thursday after the latest in a string of financial problems dismayed shareholders once again.
Wall Street experts say the unthinkable is more likely than ever: Michigan's largest company could be bought by a corporate raider like Las Vegas billionaire Kirk Kerkorian, forced to file for bankruptcy, or both.
Getting GM out of bankruptcy could require the same drastic cost-cutting that is wracking Delphi Corp., its largest parts supplier, right now.
Lower wages, less generous benefits and fewer jobs would not only be devastating for the automaker's 142,000 U.S. employees. It would hurt everyone who makes parts for GM cars and trucks, sells furniture and homes to GM workers, or treats their children for the flu.
Almost everyone in Michigan has a stake in GM's future.
But the facts are unavoidable: You can now buy every single share of GM stock for a mere $13.5 billion, or about $3.5 billion less than last spring.
Experts say a buyer like Kerkorian could sell GMAC (the division that loans money for everything from cars and homes to Manhattan skyscrapers) for about $12 billion, take GM's $19 billion in cash and stock, put the automaking business into bankruptcy, and walk away with an astounding profit.
In the world of high finance, $13 billion is not a large amount. Remember that Kerkorian was willing to pay $22.8 billion for Chrysler Corp. when he launched his unsuccessful takeover attempt of that carmaker in 1995.
There is a growing sense that GM Chairman and CEO Rick Wagoner, as well as the company, is running out of time.
Copyright 2005, Detroit Free Press
Distributed by Knight Ridder/Tribune Business News.
Subscribe to MPH Magazine
Join a discussion about this story