General Motors could announce today (3 March) it is buying Delphi’s global steering business, a media report said.
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The steering business, based in Saginaw, Michigan, is the first in what would likely be a series of purchases GM would make from Delphi, the Wall Street Journal said in a report citing unnamed sources. It added Delphi was running some businesses – all previously owned by GM – mostly for the benefit of the auto maker as they are believed to be losing money.
The automaker has been in in talks with its supplier for for some weeks about buying some Delphi plants central to GM’s vehicle manufacturing. Delphi, in bankruptcy protection since October of 2005 and prevented by the credit crunch from raising funds to emerge from restructuring, is GM’s largest supplier and a former subsidiary.
Terms of the steering business deal are not expected to be disclosed on Tuesday, one source told the WSJ, while another said GM was expected to try and sell on the steering business as soon as possible.
US Treasury department approval may also be needed, now the government has a major say in GM’s operations after giving it a US$13.4bn loan.
The report also noted that selling the plants to GM would reduce Delphi’s chances of financial assistance from the automaker though passing the unprofitable businesses on to GM could help reduce losses that have long battered the supplier, which is reasonably healthy outside North America.
The Wall Street Journal added that Delphi agreed a deal over two years ago to sell its steering business to a private equity firm but the plunging auto market meant the agreement could not be finalised.
