are you kidding. GM begged the unions to take a 100 billion dollars for retirees healthcare. they begged to write a 100 billion dollar check. last quarter GM had 12 billion in operating loss. AMD lost 93 million. AMD has 4 billion in assets, GM has 60 billion. AMD has 8 billion in liabilities, GM has 186 billion. please don't compare the two. there's a reason why a company with 60 billion in assets has a market cap of 2 billion. it sucks. and to assume that there are other countries just willing to buy it is absurd.
this is what i have always thought. it's one thing if the cars were actually different but it's the same cars! get rid of those extra brands..focus on quality with your two main brands.
I pretty much agree with this. I'd keep the names Cadillac, Chevy, and Saturn. I don't know anyone even driving a Saab, Hummer, or Pontiac. It would make sense to have low, middle, & high end brands like that.
Make no mistake, GM is in a world of hurt. I wasn't proposing an outright acquisition of GM. Rather, having a sovereign fund from the Middle East purchase an equity stake or enter into some kind of JV, where they would act as a benefactor of sorts. Right now, the Arabs can buy in for very cheap. The synergy in the deal lies in the UAE's ability to perhaps build a new plant there in the future.
dude! the gulf isn't completely stupid. abu dhabi's soverign wealth fund was supposedly 500-800 billion a year or so ago. just like the market its probably lsot 30-40%. so at best its probably 300-400 billion today. they just injected around 50 billion into dubai. dubai's going to cause a lot of pain for them. they themselves are building huge projects. oil prices are at 55-57 bucks. sure they won't hit a recession but the gulfs markets have gone down over 50% too in the past year. it does not serve the UAE interest to buy a stake in a blackhole that sucks money and produces products even americans dont want to buy. they're not getting a deal. if they were someone would have bought it. you can buy GM for 2 billion dollars. there's a reason its market cap is 2 billion. it burns money.
No, you can't buy GM for $2B. It's breakup value is over $100B. The auto industry is extremely capital intensive and would provide social and economic benefits to Abu Dhabi over a long-term investment horizon of ~20 years. Granted the UAE sovereign wealth is down, but this is more about job creation and diversifying an oil & gas depended economy. What happens when people stop wildcatting oilfields when they run dry in the UAE. They need some kind of sustainable enterprise. The automotive business is one. The others are financial services and semiconductor manufacturing.
its market cap is 2 billion. and if the auto industry provides oh so much social and economic benefit, why wouldn't we want to keep it and keep the 3 million direct or indirect jobs? plus the labor market in abu dhabi isn't exactly one that can handle these kinds of job. secondly their oil isn't running dry anytime soon. they have 8-10% of the worlds oil reserves. yet a population fo 5 billion including probably 4 billion expats. im sure they'll be fine. there is no economic reason for any sovereign wealth fund to buy anything of GM.
Since you have no background in M&A, let me educate you on the very basics. When a deal is being structured, you value a company based on comps, typically sales or EBITDA multiples. Then you value the synergies as well as look at their future cash flows. Finally, you look at the book value of their assets. Once you have a fair value, you tack on a capital premium at your own discretion. (By the way, the market value does nothing more than indicate the value of their equity. Levered firms are capitalized with debt and equity).
yet ironically claiming it will cost them more to buy it doesn't enhance your argument that it benefits them to buy it. and yeah. gosh. i wish i was at wachtell/cravath doing m&a right now.
