VCCA Home Forums GENERAL DISCUSSION General Discussions Where is the US going?

Inside The Deal To Sell GM to China’s SAIC



By now, you’ve no doubt heard the news: General Motors’ Chinese partner, Shanghai Automotive Industry Corporation (SAIC) will take a controlling stake in GM by purchasing the equity sold to the U.S. and Canadian governments during the bailout. But what does it mean for the future of GM?
The announcement was brief, cryptic and buried in the excitement over the multitude of concepts and new vehicles GM has just announced it will debut at the Shanghai auto show in a few weeks. The press release reads simply:
“Shanghai Automotive Industry Corporation (SAIC) and General Motors (NYSE: GM) are announcing today that an agreement has been reached with the governments of the United States and Canada that will allow SAIC to purchase the shares of GM owned by the respective governments. The sale is expected to be completed by this time next year pending approval from U.S., Canadian and Chinese government regulators.”
The implications of this announcement are enormous. The U.S. Treasury currently holds a 26-percent stake in General Motors after selling roughly half of its interest during the company’s Initial Public Offering in November 2010. The Canadian Government, meanwhile, holds nine percent of GM stock after selling of 17.4-percent of its stake during the IPO. Together, that’s 35-percent of the company.
Should the respective governments sign off on this deal, SAIC will take a 36-percent stake in GM (SAIC already bought a one-percent stake in GM during the company’s IPO), a controlling interest. In effect, GM will be owned and under the control of SAIC, which will make combined company far and away the world’s largest automaker by volume. It goes deeper than that, though. SAIC is owned and controlled by the Chinese Government. If this deal goes through, GM will essentially be sold to the government of China. How could our government let this happen? As is so often the case, it’s all about the money.
The “bailouts” of Chrysler and GM have been fairly unpopular with the American public. Many have accused the government of overstepping its authority and wasting taxpayer money propping up two companies who failed in their own right, and this negative perception has dogged the Obama Administration for years now. The Treasury gained some good PR last year when it sold roughly half its stake in GM, but for many opponents, it wasn’t enough. With the 2012 election looming, the Obama Administration is likely looking for a quick way out of this situation, and it appears the Chinese made them an offer they couldn’t refuse.
With GM’s share price closing at $33.01 on Thursday, SAIC would have to pay a minimum of $17.3 billion to buy all of the U.S. and Canadian Governments’ shares of GM, though the actual sale price will likely be higher so the governments can turn a profit on the sale. But unless SAIC offers the estimated $56 per share necessary for the U.S. and Canadian Governments to break even on their investment in GM, the taxpayers are going to take a bath on this deal.
Details regarding changes to GM post-sale are scarce right now, but the deal will likely see current GM Chairman and CEO Dan Akerson leave the company and replaced with SAIC chairman Hu Maoyuan and president Shen Jianhua. GM’s headquarters should remain in Detroit, but will answer to Shanghai. Shanghai GM, SAIC’s joint-venture with GM in China, will likely be folded into SAIC down the road as it will no longer be necessary under Chinese law.
Though the announcement comes as a shock, the warning signs seem so clear now. Why GM kept Buick and killed Pontiac. Why the quintessential American midsize car, the Chevrolet Malibu, is debuting in Shanghai. Why the Chevrolet Cruze and Buick Regal were on-sale in China long before the U.S. Why the Buick LaCrosse was designed in China and why China is getting a Buick version of the Chevrolet Volt, along with a new plug-in hybrid Buick SUV. A deal like this doesn’t happen overnight, and it’s clear now that GM has been buttering-up SAIC for the past few years.
The only question is: Is a GM run by the Chinese Government a better deal than GM run by the U.S. Government? We’ll find out soon enough…April 1, 2012, to be exact.
Scott Evans on April 1 2011 5:17 AM


Read more: http://blogs.motortrend.com/inside-deal-sell-gm-chinas-saic-13985.html#ixzz1JE43mbtK

ReplyReply AllMove...

Well, That don't sound good to me, specially when Chevrolet and VCCA are having a bit to-do in Flint in July.
What with Ford and Mopar being mostly EU companies.

Anyone want to start up a new "American Motor Company"?

The American people are about out of an American Car company,unless.... You might want to consider Honda and Toyota American immagrants?

Check some of the dates on this article. Especially when it was originally posted (April 1) and the last line of the article.


http://blogs.motortrend.com/chinese-gm-14217.html

Like someone else said in another blog, these April Fool jokes are getting old.

Dan

Yep..it appeared to be an April Fool joke to me as well.

From the Internet:

"Some people didn’t see the funny side of Scott Evans’ brilliant April Fools blog about Chinese automaker SAIC taking a controlling interest in General Motors. I can only conclude they must have missed the fairly obvious clue in the last line of the piece, probably because their blood pressure had hit the rev limiter somewhere around the fifth paragraph. Their reactions ranged from spittle-flecked outrage to genuine sorrow that what was once America’s greatest company had been reduced to this."

Sorry folks I should have checked closer, like the Junk Yard Dog said my blood pressure was through the roof.

Yeah, and Scott Evans is now on my list......

Again, something like that shouldnt even be created if it's not real. No need to give the Gubmint and outsiders idea's. They already have the power enough to make stupidity, reality.

It sounds to real to be a joke.
That's what makes it scary.
I do try my best NOT to buy Communist made goods.(but now a days it's hard)

The article is quite believable considering how our American heavy truck industry has changed. Consider the following: The White Motor Co. was purchased by Volvo of Sweden. Freightliner Corp was purchased be Daimler Corp. along with Detroit Diesel. The GMC heavy truck line was purchased by Volvo and discontinued. Much of GM's medium truck line was/is an Isuzu product now sold exclusively by Isuzu. Ford heavy trucks which sold out to Sterling and is owned by Daimler ceased production last year. Western Star Trucks once marketed by White is also owned by Daimler. A large percentage of the medium duty market is made up of foreign imports-Mitsubishi-Isuzu-UD-of Japan to name a few. The icon of American trucks "MACK" is also owned by Volvo. The companies that once sold their products all over the world are now owned BY companies all around the world. One can only wonder what the next industry to be targeted will be!!

Another example is Frd tractor sold to New Holland which has since been bought by Fiat Agri. International Harvester sold to J.I. Case and I think since been sold again.
Tony

I doubt that for very long there will be anyone making anything besides Walmart bags and plastic bottles in the USA, and guess why?
Maybe it could be that it is easier to sell your company to a foreign firm, stick the money in an offshore bank, than battle with the labor unions and the Government regulations and state and federal taxes here in the good old U.S.of A.
I wonder if John Deere and Caterpiller will even keep a warehouse in Ill.
Is the Wisconson legislature and looking for a slow boat to China, yet?

will we ever learn?

Right on Mack!

While this may have been a "joke," like most good jokes, there is often an element of truth in every good joke.

According to real published reports polls indicate that Americans did not support the "bailout" of GM and Chrysler by the government, and it will be an issue in the 2012 elections if they still have a stake in these companies. Fiat has already begun to increase its share of Chrysler.

Polls indicate that Americans did not support this bailout for a couple of reasons. First, many Americans see it as a bailout of the unions, not the car companies; and that a normal bankruptcy would have been better for the company and its former stock and bond holders.

Americans are also upset because the government went around normal bankruptcy law and denied bond holders their indenture rights to company assets.

Because the government went around normal bankruptcy laws and gave the stock in the new GM to itself and the unions, the existing bond holders did not receive a penny even though their bond contracts gave them first priority on the assets of GM and Chrysler.

Since GM and Chrysler stock and bonds were widely held in individuals' accounts, mutual funds and retirement accounts, millions of people lost out on their rightful claims and they are not happy campers.

Further, although the government tried to put a positive spin on the IPO of GM earlier this year, the sad fact that at an IPO price in the low to mid-30's, they got so little for each share of stock they will need to get $53 a share for the remaining stock to simply break-even on the "investment" in GM (and this does not include the money they have been paying in interest on the money the government borrowed to bail out GM and C).

While GM closed at almost $31 on Friday, it has been selling for under $30 recently. Even at $31 a share, the taxpayers stands to lose over $11 billion on the "investment" in bailing out GM.

However, on a positive note, with the end of government control of GM it can rely on real engineers in the design and marketing of new cars and not the automotive "engineers" in Washington.

Finally, GM is introducing its first car designed for the China market and made in China. Also, the China division is one of the most profitable divisions in the company. As I stated earlier, there is often an element of truth in every good joke.

Ditto Dr David, Ditto!