It’s been over a month since the initial round of bidding for
GMAC occurred, and yet there has been no apparent movement on this transaction. What’s going on?
MarketWatch‘s David Wiender has a theory – GM appears to be looking for a deal
that will allow it to buy back GMAC at a later date. The larger banks on Wall Street are viewing this as a veiled
attempt at soliciting a bailout, and aren’t really interested in bankrolling GM’s recovery. It ends up being a
lose/lose proposition – if GM survives, the buyer would have to surrender its interest in GMAC; if GM dies, it’s likely
that GMAC would be greatly affected. GM is also offering up only a majority stake in GMAC, which will not allow the
buyer to fully integrate the finance company into its own operations. This, combined with the $10-15B price tag for the
deal, has greatly limited the number of buyers.
An interesting side note to this story is that GM’s
borrowing activities have generated $1.75B in fees over the last five years, and $277M last year alone. Hey, a few
hundred million here and there, and all of a sudden we’re talking about real money.