Roger Penske struck a deal today that will give him the Saturn brand name for $200 million, an amount that on the face of it has the look and feel of a steal. Bankrupt GM doesn’t break out financials on Saturn and in this deal Penske is not buying the 350 Saturn dealerships. And he doesn’t become a manufacturer. He will initially contract out through GM and later others to build cars for him, which in turn would be sold through those dealerships – and no doubt with Roger taking a slice of each car sold. He does own the brand, afterall.
Archive for June 5th, 2009
Auto Industry / Comments Off
Auto Industry, Bank Rescue Plan, Banks, Corporate Governance, Credit Crisis, Wall Street, Washington / Comments Off
The front page of today’s Wall Street Journal delivers more evidence of an inevitable but still disturbing trend in American business: officials of the U.S. government starting to call for important changes at huge companies by virtue of the large ownership stakes amassed as a result of billions in public assistance.
The latest story states the Federal Deposit Insurance Corp. wants a shake-up of Citigroup’s top management. The Journal article is sourced to people familiar with the matter.
Maybe the Citigroup executive suite does need a change. Maybe Chief Executive Vikram Pandit has been too slow in reshaping and slimming the giant bank. But should that primarily be the decision of the FDIC and its chairman, Sheila Bair? Or should it rest with the board of directors, who now should be representing the interests of all shareholders, and that includes Uncle Sam.
As the above chart shows, shares of Rio Tinto have been on a tear since it confirmed in early February a complex deal that would have raised cash to help it pay down a suffocating debt load. But that deal was at a cost some couldn’t take – a Chinese controlled miner would have significantly increased its equity stake in Rio Tinto and through a series of joint ventures, would have had a more direct stake in some iron ore projects, something many in Australia felt could be a national security issue by letting another country dominate a commodity market. So, Rio Tinto called off the deal with Chinalco yesterday and announced instead a $15.2 billion rights offering and a big joint venture with competitor BHP Billiton.