A 2008 GMC TopKick C5500 Duramax Diesel. Navistar said it will sell the TopKick through GM's dealer network.
(General Motors Corp. via Bloomberg)
SOUTHFIELD, Mich. - General Motors Corp., the world's largest automaker, agreed to sell a truck-making unit with an estimated value of $500 million to Navistar International Corp.
The deal will add to the $21 billion in assets that GM has shed in the past three years and will help pay operating costs following a combined $50 billion in net losses in that span.
"They might as well monetize one more nonstrategic asset to fund the turnaround," Pete Hastings, a fixed-income analyst at Morgan Keegan & Co. in Memphis, said in an interview Wednesday. "GM doesn't have a liquidity problem, but adding more coins to the coffers is never a bad thing."
While GM and Navistar didn't give financial terms, a Bear Stearns & Co. analyst valued the unit at $500 million in May. The transaction will be complete next year, the two companies said in a statement yesterday.
GM built about 40,800 of the so-called medium-duty trucks last year. The vehicles are commonly used as dump trucks and cargo haulers.
Detroit-based GM fell 18 cents to $26.48 in New York Stock Exchange composite trading. Navistar, based in Warrenville, Ill., gained 5 cents to $53.85 in over-the-counter trading.
Navistar said it will sell the Chevrolet Kodiak and GMC TopKick through GM's dealer network in the United States and Canada. The truckmaker said it will move production of the vehicles from Flint, Mich., to a Navistar facility to be designated later.
GM will retain ownership of the Flint factory and continue to build other products there. GM will also continue its medium-duty truck relationship with Isuzu Motors Ltd. to market W-Series trucks through GM's medium-duty dealer network.
GM doesn't break out the unit's financial results. Bear Stearns analyst Peter Nesvold said in May that the business had annual revenue of about $2 billion and estimated its value at $450 million to $500 million.
Nesvold also said then that if Navistar were the buyer, the increased production could add 50 cents to $1 a share to Navistar's earnings.
© Copyright 2007 Globe Newspaper Company.
