ITT Purchases Majority Stake in GM Parts Unit : Autos: Sale of small motor and windshield wiper business is part of GM bid to revamp North American operations.
General Motors Corp. on Tuesday stepped up its efforts to shed nonessential parts operations by selling a majority stake in its small motors and windshield wiper business to ITT Corp. for $400 million.
GM said the sale of its Motors and Acuators Business Unit, when combined with last week’s proposed sale of six GM rear axle and forge businesses to another buyer, represents more than half of the 14 major business lines the auto maker intends to sell by the end of the year.
“This represents a significant portion” of the 14, GM Vice President J.T. Battenberg told a news conference. “We still have several lines of businesses that we’re still negotiating with prospective partners and buyers.”
Battenberg declined to provide specifics about the pending transactions but said GM hopes to complete the sale of the remaining lines by December.
The 12 remaining parts operations up for sale had combined 1992 revenue of just under $1.25 billion, or about 5% of GM’s Automotive Component Group sales last year.
ITT said the purchase, its largest since the 1970 acquisition of Hartford Insurance Group, will give the New York conglomerate an 80% stake in the Delco Chassis unit, which had 1992 sales of $760 million. ITT stock jumped $1.75 on the news to $93.75 on the NYSE; GM eased 25 cents to $45.
Timothy Leuliette, vice president of ITT and president of ITT Automotive, called the GM subsidiary a “crown jewel” that will boost ITT’s competitive position in Europe as well as North America.
“We believe the issue here is not one of an unattractive business that needs to be turned around by any stretch,” Leuliette said. “It’s a very attractive business.”
He said the 5,451 employees who work at the unit’s three manufacturing plants in New York and Mexico, as well as Delco’s engineering and technical center in Dayton, Ohio, will be integrated into ITT’s existing operations.
The sale is the latest in a series of asset divestitures announced by GM in recent weeks as it tries to restructure its money-losing North American operations.
GM recently announced plans to sell its Allison Gas Turbine business in Indianapolis, an Inland Fisher Guide trim plant in New Jersey and six rear axle and forge plants in the United States and Canada.
Battenberg said the moves are part of GM’s long-term strategy to focus on seven core activities. Since 1990, GM has lost $17 billion in North America and is in the midst of closing 22 parts and assembly plants over the next few years.
He said proceeds from the sale will be used to help expand GM’s other parts-making operations.
“We want to be able to plow money back into the business to grow,” Battenberg said. “We are running at a positive cash flow, and this additional cash flow allows us to redeploy our assets in the seven business sectors that we announced as strategic.”
The recent asset sales have angered United Auto Workers members, who fear GM is rushing to unload subsidiaries before the company signs a new labor pact. Talks are not expected to intensify with the union until mid-October.
But Battenberg said GM has been negotiating with scores of companies for several months and that the timing was not meant to send a signal to the UAW.
“It’s coincidental that the timing impacts the negotiations,” he said.
Leuliette said ITT officials met with members of the International Union of Electrical Workers, which represents the 4,780 hourly workers at the Delco plants, Monday night and that the union appeared to be supportive of the deal.