General Motors is considering a bid of US$12.5 to $13bn for a majority stake in its financing arm from a group led by New York private-equity firm Kohlberg, Kravis & Roberts and some banks, The Wall Street Journal reported on Wednesday, according to The Associated Press.
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The newspaper reportedly said the non-binding bid for the stake in General Motors Acceptance Corp. (GMAC) gives the automaker another option to what had been considered the leading bid from Cerberus Capital Management, a private-equity and hedge fund group.
But the Journal, citing unidentified people familiar with the offers, said GM is cool to the new proposal from the KKR group due to some of its fine details, and could decide against selling to either group, The Associated Press said.
Instead, the newspaper said GM could sell off GMAC’s home mortgage and insurance operations while keeping the auto-financing arm, AP added.
GM and GMAC spokespeople declined to comment to the news agency on the report.
The Associated Press said the automaker wants to sell a stake in GMAC in part to improve the finance division’s ability to borrow money by separating its debt rating from the non-investment, or junk, rating that has been assigned to parent GM. Some major investors are prohibited from buying securities that carry a high-risk rating.
AP added that GM’s board is expected to convene in about two weeks to evaluate plans for GMAC.
