NEW YORK -- General Motors Corp., the world's largest automaker, is auctioning off a 51 percent stake in its lucrative financing unit, General Motors Acceptance Corp., after losing nearly $4 billion this year as it struggles with high costs, declining market share to foreign rivals and slumping sales of cash-generating sport utility vehicles, according to Reuters.
GM has said it would prefer to sell a majority stake in GMAC – which analysts estimate could fetch up to $10 billion – to a strategic partner to restore GMAC's credit rating to investment-grade status.
Among the potential bidders is Wachovia Corp., which has teamed up with private-equity firm Kohlberg Kravis Roberts & Co. to explore an offer, according to The Wall Street Journal. J.P. Morgan Chase & Co. has joined with private investor J.C. Flowers & Co. to pursue a bid, and private-equity firm Cerberus Capital Management has also expressed interest.
Prior to teaming up with large banks, private-equity buyers for a GMAC stake were initially ruled out because they are deemed less likely to help GMAC restore its credit ratings to investment grade. Now, however, they appear to be pivotal in being able to help structure a transaction.
GMAC unit’s $314 billion in assets makes it one of the world’s largest finance companies.
