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Analyst: GM mulls deal
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November 29, 2000: 3:25 p.m. ET
Analyst speculates GM's dragging its feet on buyback means deal ahead
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NEW YORK (CNNfn) - General Motors Corp. may be ready to announce a deal involving its satellite business Hughes Electronics Inc. next month, according to an analyst's report.
Prudential analyst Michael Bruynesteyn said in a report Wednesday the world's largest automaker may have suspended its stock buyback program in preparation of a major announcement and also noted the company's December meeting historically has been a venue to discuss Hughes.
"At the end of 3Q00, GM stated an intention to complete the remaining $1.1 billion of their announced $1.4 billion program by the end of the year," Breynesteyn wrote. "However, we have observed that GM appears not to have been in the market for its own shares for most of November. Absent a need to retain cash, which we deem unlikely, the most logical explanation is that GM expects to carry out a significant transaction in the near future which precludes it from buying back shares at this time."
To avoid the appearance of impropriety, companies will often postpone buybacks ahead of announcements, which often boost share prices.
 GM spokeswoman Toni Simonetti said nothing had changed from the "snapshot" the company gave of its buyback plans when it released quarterly results.
"We still expect to complete that repurchase by the end of the year," Simonetti said.
According to Brurnesteyn, about $13 per share of Hughes value could be unlocked by a GM (GM: Research, Estimates) deal, and it is likely to be on the agenda at the Dec. 5 meeting.
GM could decide to spin off the rest of Hughes to unlock value or look for a buyer. Much of the speculation about a Hughes buyer has centered on News Corp. and its chairman, Rupert Murdoch. The company has long sought a U.S. satellite television operation such as DirecTV to fill out Sky Global's expansive international operations, which currently reach more than 85 million households despite a gaping hole in the United States
Hughes sold its satellite manufacturing business to Boeing at the start of this year to concentrate on its satellite communications business, which includes DirecTV.
"We are still actively engaged in discussions about Hughes with multiple interested parties," Simonetti said. "Those discussions are progressing."
A spokesman for Hughes did not immediately return a call requesting comment.
Investor reaction to the news was muted, with GM shares rising $1.19 to $50 and Hughes falling 26 cents to $22.90. 
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