GM May Buy Delphi Steering Operations
DETROIT (AP) — General Motors Corp. is in serious talks with former parts arm Delphi Corp. to take back Delphi's Saginaw, Mich.-based steering operations, a person familiar with the negotiations said.
The person, who asked not to be identified because a deal had not been announced, said GM would buy back the factory because it makes critical parts for the troubled automaker. A deal could be announced as soon as Tuesday.
Delphi was spun off as a separate company in 1999 by GM. The parts company went into bankruptcy protection in October 2005 and has yet to emerge.
The person says GM would likely hold the steering operation until it was able to sell it.
Delphi spokesman Lindsey Williams had no comment on the situation.
GM Chief Operating Officer Fritz Henderson said last month that talks were under way for possible transfer of some of Troy-based Delphi's factories back to GM. The money-losing Delphi makes parts that are essential to GM's business, and GM has an option to take back factories in the original spinoff agreement.
Henderson said in February that GM and Delphi must solve Delphi's financial woes and says GM's restructuring plan has money set aside for that purpose.
But he said GM could take back an unstated number of plants and inject cash into Delphi, which has been unable to get financing to get out of bankruptcy protection.
GM presented a survival plan on Feb. 17 that includes closing five U.S. factories and cutting 47,000 jobs worldwide by the end of the year. The Detroit-based automaker also asked the federal government for up to $30 billion in loans. GM already has received $13.4 billion in federal loan money.
Delphi put the steering division up for sale after identifying it as a non-core business and had been in talks with Platinum Equity, a Los Angeles-based private-equity firm. But the deal apparently failed to materialize.
The steering operation employs about 3,600 people, but the company announced about 800 layoffs last month.
News of the possible deal with GM was reported in The Wall Street Journal on Tuesday.
GM shares rose 3 cents to $2.04 in morning trading.