Delphi Spinoff and Stock-Price Effects

Delphi Automotive Systems Corp. declares its independence today, when General Motors Corp. distributes its remaining shares of the world’s biggest auto parts manufacturer to sever Delphi’s final ties to GM.

Although notice of the move was given well in advance, some GM shareholders may be surprised Saturday when they see GM stock has dropped more than $10 overnight tonight as a result of the spinoff.

But looks can be deceiving. Although GM common stock (ticker symbol: GM) will drop an estimated 17% as a result of the spinoff, current stockholders will have essentially the same stock value because they will get Delphi shares (ticker: DPH).

“For the current shareholder, there’s no drop,” said Mark Tanner, GM director of financial communications. “All other things being equal, you’re going to have the same money.”

GM shareholders will get 0.69893--about seven-tenths--of a share of Delphi common stock for each share of GM stock. About 453 million shares of Delphi stock will be distributed to shareholders.

“I think that as Delphi grows, then the stock will be of great value to me,” said stockholder and GM retiree Ralph Drake. “We’re all going to be nicely rewarded for holding onto the stock.”

In Thursday’s trading, GM shares slipped $2 to close at $82.88, and Delphi gained 94 cents to close at $20.50. Both trade on the New York Stock Exchange.

General Motors has 12,500 employees in California, most working for the Hughes Electronics division. Hughes, which trades separately as a tracking stock under the ticker GMH, has not been spun off.