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Delphi spinoff completed
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May 31, 1999: 3:43 p.m. ET
GM sells remaining Delphi stake to shareholders in $9.3B distribution
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NEW YORK (CNNfn) - General Motors Corp. completed the planned spinoff of its Delhi auto parts subsidiary in a $9.3 billion distribution to shareholders.
The move allows GM, the world's largest automaker, to focus on its core car and truck business while Delphi pursues supply contracts with automakers besides GM.
Delphi, which used to be part of GM's sprawling manufacturing empire, went public earlier this year when GM sold a 17.7 percent stake in the company. Friday's move means GM will no longer own a stake in the parts maker. Under terms of the plan, GM shareholders will receive 80.1 percent of Delphi and the remaining 2.2 percent will go into a pension trust fund.
"This transaction creates value for GM shareholders while allowing for an even more competitive Delphi," John Smith, GM's chairman and chief executive officer, said in a prepared statement. "We wish Delphi and its employees great success as they begin their journey as a fully independent company."
Based on Thursday's closing market price of Delphi stock on the New York Stock Exchange of 20-1/2, the value of the spinoff dividend to GM stockholders is approximately $9.3 billion, or approximately $14.33 per share of GM common stock.
Delphi, which had sales of $28.5 billion last year, said the spinoff will allow the company to pursue supply contracts with other automakers, which previously were reluctant to use Delphi because it was a unit of GM.
Currently, two-thirds of Delphi's (DPH) revenue comes from GM. The company wants to reduce that to 50 percent in the next few years.
In conjunction with the separation, three GM (GM) executives -- Chairman Smith, Vice Chairman Harry Pearce and Chief Financial Officer J. Michael Losh -- resigned from Delphi's board of directors.
The Delphi board said it had no immediate replacements to announce and that any additional directors will be determined based on business needs in the future.
The maker of steering and suspension parts, air bags, air conditioners, brakes and other parts has nearly 200,000 employees in 37 countries.
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