General Motors has decided it will not sell its ACDelco business.
The proposed sale was one of a number of initiatives tabled last fall as GM looked to build its balance sheet. GM retained Merrill Lynch to handle the potential sale. However, comment in the media has indicated that the tight credit markets had impeded what GM felt was an appropriate price for the business.
In a conference call, GM chief executive Fritz Henderson delivered the news.
“It’s a highly profitable business for us. It’s creating good, strong cash flow,” he said. “Our conclusion was that we weren’t going to get the value for the business. We’d rather keep it and grow it.”
The sale of the ACDelco business would have been a complex one under any circumstances, as many of the resources are shared with GM, including facilities and people. It is also thought that the combination of the state of the credit market and this complex intertwining kept many prospective bidders on the sidelines. Those bids which did come fell short of expectations.
The proposed sale was part of a multi-faceted divestiture program floated last fall that was expected to raise from US$4 to $7 billion and included the sale of the Hummer business.
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