By on October 6, 2010

The flip-flopping over GM’s IPO strategy continues, as The General backs away from its “retail investor” focus and begins courting Sovereign Wealth Funds in earnest. Bloomberg reports that GM’s underwriters have approached

Riyadh, Saudi Arabia- based Kingdom Holding Co., Abu Dhabi-based Mubadala Development Co., Qatar Holdings LLC and Singapore-based Temasek Holdings Pte.

In hopes that they’ll become “cornerstone investors” in the new GM’s IPO. Who knows what will come of the negotiations, but assuming that one or more of the Arab SWFs end up with a large chunk of GM equity, a number of PR problems present themselves. Though (marginally) less emotionally-charged than a possible ownership stake by a Chinese firm, such an outcome would amount to the US-sponsored foreign takeover of an American firm. Politically, the bailout is much easier to justify if GM ends up in American hands… especially since Fiat is likely to gobble up the Chrysler equity it wasn’t handed on a taxpayer-funded platter. But beyond that, GM will have to work twice as hard to convince the American people that it’s not working to serve the interests of its oil-rich Gulf State owners. Renewed scrutiny over its most profitable business, namely gas-guzzling trucks and SUVs, would be a given. Any hesitation (however well-justified) over electrification of the automobile would be interpreted as an oil-cartel plot. And renewed turmoil in the middle east could further inflame anti-Arab or anti-Muslim sympathies, potentially bringing greater pressure on GM. Meanwhile, GM’s energy-independence rhetoric around its E85 ethanol efforts would be extremely awkward.

But will Americans notice or care? At what percentage of ownership would these factors come into play?

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51 Comments on “Ask The Best And Brightest: Will Americans Care If A Petro-State Owns GM?...”


  • avatar
    Slocum

    Another question — might the Saudis pay above market prices for GM stock for political reasons (that is, as a way of buying influence with an Obama administration that very much wants to be able to argue that taxpayers didn’t take a huge bath on the auto bailouts).

    • 0 avatar
      drifter

      might the Saudis pay above market prices for GM stock for political reasons
      <tea-bag-on>
      For religious reasons as well, won;t be surprised if Kenyans did same for ethnic reasons and Chavez for political reasons.
      <tea-bag-off>

  • avatar
    Zackman

    To quote a (modified) line from the old movie “Kelly’s Heroes”: “Business is business, maybe (they’re) Republican.”

    Not sure if most anyone cares, as long as it’s someone else’s money. The trouble with that line of thinking is, the ramifications and/or consequences aren’t often manifest ’til long after the fact. It’s all a very large chess game and no one wants to get “checkmated”.

    We’ll see…

  • avatar
    jacob_coulter

    The American people will be pulling out pitchforks and torches if after the BILLIONS of taxpayer dollars we put down this rabbit hole, and the Saudis end up owning it.
     
    The same exact thing happened with Chrysler.  the American taxpayer bailed them out only to give them over to Fiat.  What a great investment that was.

    • 0 avatar
      psarhjinian

      The American people will be pulling out pitchforks and torches if after the BILLIONS of taxpayer dollars we put down this rabbit hole, and the Saudis end up owning it

      Why?  The American people paid trillions to subsidize the security of oil in the middle east to the benefit of the House of Saud and several (and not all domestic) oil companies, only to continue to see the region devolve into nastiness.  Why would this be different?

      It’s a bargain by comparison, if you ask me.  Heck, if nothing else, it’s a net transfer of dollars into America for a change.

    • 0 avatar
      jacob_coulter

      More Michael Moore nonsense.
      Why did so many Democrats vote to go to war with Iraq if it was all over securing Saudi oil fields, including Hillary Clinton, John Kerry, and now Vice President Joe Biden?  And shouldn’t our Dear Leader immediately pull out ALL troops?
       
      I guess there all in on the conspiracy!
       
      Believe me, the American people will be PISSED they bailed out GM to only give it to the Saudis.
       
       

    • 0 avatar
      psarhjinian

      Why did so many Democrats vote to go to war with Iraq if it was all over securing Saudi oil fields, including Hillary Clinton, John Kerry, and now Vice President Joe Biden?  And shouldn’t our Dear Leader immediately pull out ALL troops?

      You’re assuming a) I’m a Democrat and/or care about toeing the Democrat line, b) that I’m American at all and, most importantly, c) that I’m talking about the Iraq war specifically.  That the Democrats have more or less agreed to stay involved in that part of the world should tell you something about how much money we’re talking about it.

      The point is this: if you’re going to say that Americans are going to get annoyed about, oh, fifty billion (at most!) on General Motors, then that would be awfully hypocritical considering how much money is spent to ensure the security of oil supplies in the Middle East. This isn’t Michael Moore sensationalism: if the Middle East didn’t have oil resources worth securing, it would get the same level of support and intervention as sub-Sarahan Africa.

      If you’re going to be annoyed about taxpayer dollars enriching foreign entities, it’s a little late to get annoyed now.

    • 0 avatar
      jacob_coulter

      I can tell by your postings you’re absolutely a partisan Democrat, and I think it’s hypocritical for Liberals to keep promoting this lie that the wars in the middle east was because the US military is doing the bidding of oil companies.
      If it was all about oil, it be a lot easier to drill in our own backyard.
      I thought the war in Iraq was a mistake, but I don’t think it was done because of the Loony Left theory that it was all about Exxon Mobil’s profits.
      Go ahead and see if the majority of the American people buy your ridiculous theory that it’s “all the same.”

    • 0 avatar
      psarhjinian

      I can tell by your postings you’re absolutely a partisan Democrat

      Here, let me show you my Canadian passport.

      Why did so many Democrats vote to go to war with Iraq if it was all over securing Saudi oil fields

      Money.  Why did Republicans bail out banks?  Money.  Why did Clinton push for the DMCA?  Money.  Why did Bush push for NAFTA?  Money. Why is the US hip-deep in the Middle East? Money.

      Do you see a theme, here?

      It’s all about money.  It’s always about money.  If you see the two sides diverge on opinion, it’s because one side stands to make a lot of money while the other doesn’t.  When both sides are pushing for the same thing, it’s because there’s serious money involved.

    • 0 avatar
      pgcooldad

      I thought the USA went into Iraq to find “Weapons of Masssss Destruction” – Funny thing is, we haven’t even found a Super Soaker after all these years.
      The government didn’t give Chrysler to Fiat, it was a fair trade. They got 20% in exchange for billions in platforms, engine technology and the most important COMPETENT MANAGEMENT. This ensured that thousands and thousands of Chrysler and suppliers jobs were saved. All of which are tax paying jobs. Had they gone on the unemployment rolls, we would be paying for it.
      For Fiat to obtain a majority share of Chrysler they have to put in their own money … and get this … they might sell a portion of Ferrari to raise the cash!!  Porca Madonna!

    • 0 avatar
      jacob_coulter

      Every job “saved” by the Chrysler bailout cost $250,000 per job saved.  I would have rather just cut everyone a check and called it a day.
       
      The wars in Afghanistan and Iraq aren’t over money, that’s a tenet of Marxism, that all wars are over money.

    • 0 avatar
      vww12

      Oh, it would be sweet justice if GM ends up owned by an oil state.
      Laugh thru the end of time to the politicos and unions who thru their actions made the bailout happen, resulting in the current state of affairs.
      Sweet conspiracy theories anytime anything is not electric, cheap, and reliable, effective yesterday.
       

  • avatar
    Daanii2

    I am against the whole bailout of GM. And an IPO of GM. That said, if foreign companies bought a significant number of shares in a GM IPO, that would not bother me. Few shares, as a percentage, are involved. Not enough to matter who buys them.

  • avatar
    340-4

    I won’t buy a Chinese Volvo. I would have very little support for GM if this were to transpire.
     
     

  • avatar

    What percentage of Daimler is owned by people in the Mid-East? How many sales has this cost them?

    • 0 avatar
      psarhjinian

      The people who buy Benzes in the US aren’t generally subject to the same kind of, ahem, -isms that the kind of people who buy mass-market GM cars are.
       
      This would be very akin to Volvo’s Chinese owners find themselves in, PR-wise: a customer base that has social “issues” with how the new owners’ culture (perception is important, here).

    • 0 avatar

      The evidence suggests that you’re right. Per Bloomberg
      Qatar is the third-largest shareholder in Volkswagen AG with a $5.22 billion stake, according to data compiled by Bloomberg. It also owns London’s Harrods Department Store Co. Mubadala [Abu Dhabi] has a stake in Fiat SpA’s Ferrari SpA.
      Abu Dhabi’s Aabar Investments PJSC is the largest shareholder in Daimler AG, the maker of Mercedes-Benz cars, with a 9.08 percent stake, according to data compiled by Bloomberg. Second-largest is Kuwait Investment Authority, with 6.89 percent of the Stuttgart, Germany-based automaker.

      On the other hand, these automakers don’t share GMs fraught PR environment. Given the political winds in this country right now, I’d argue that the chances of a negative backlash in terms of GMs public and/or government relations are not insignificant.

    • 0 avatar
      psarhjinian

      I’d argue that the chances of a negative backlash in terms of GMs public and/or government relations are not insignificant.

      This is what happens when your advertising campaign for the last half-century (at least!) has amounted to little more than wrapping yourself in the flag.

      If you thought featuring the Aveo in the “American Revolution” campaign was ironic…

  • avatar
    LennyZ

    Just like in the current bailout the government LOANED Chrysler money, and they were paid back with interest. The government made money on the deal. Consider the economic costs if Chrysler and GM went out of business. How many would be out of work then? The bailout was necessary. As far as Saudi ownership it won’t change my non-buying of GM a bit.

  • avatar

    As it would be if the ChiComs wind up owning GM, I’d consider Saudi ownership to be a perfect coda on this laughable farce of bailing out a decrepit car company/ crooked union.

    Though the notion of how Saudis would handle a UAWer caught boozing or shooting up on the job does bring a smile to my face.

    • 0 avatar
      mikey

      Hey, lots of things bring a smile to my face, pretty girls, a 64 Vette,a cold beer on a hot day. Seeing a guy beheaded for smoking a joint? Not so much.

       Whatever floats your boat eh?

    • 0 avatar
      bomberpete

      Thank you Mikey. I don’t see it happening that way, but a voice of reason is always welcome!

    • 0 avatar

      mikey, I applaud the near-flawless spelling and grammar in your statement. You’re learning!

      I kid, I kid. As for what floats my boat, I suspect we would probably agree on almost all topics (yes, even the ’64 Vette)… except those involving today’s Government Motors and the survival of the UAW.

      You just refuse to come around on those…

  • avatar
    obbop

    Life seemed so much simpler when all we seemed to worry about was creeping communism,  avoiding the draft and inter-continental thermonuclear warfare.
    Am I officially old if I recall the very firstest SuperBowl?
    Is the present somebody else’s future “good old days”?
    Befuddled in the shanty.
     

    • 0 avatar
      Zackman

      Duck and Cover, indeed! What have become “storm warning” sirens used to be yellow, and call “air raid” sirens. I am old, ’cause I remember traveling before the Interstates were built, and the major roads radiating to the suburbs had little round blue signs with an arrow pointing upward indicating it was a “bomb route”! Now they say “snow route”!

      Enough nostalgia, but things appeared to be simpler in this country back then, at least from a card-carrying baby-boomer, that is!

      I really liked my dad’s 1950 gray Plymouth, though. He had it for ten years until the driver’s side of the seat mounts were falling through the rusted-out floor!

  • avatar
    Educator(of teachers)Dan

    Aye carumba!  Maybe the Saudi’s would give us GMs Holden lineup over here just so we’ll buy more of their chief export.  “Come on down to your local GM dealer where we’ll pay the Gas Guzzler Tax for you!”

    At least the Chinese don’t want us burning more oil cause they need it.

  • avatar
    bomberpete

    Oh, you just knew that the big guys had a plot like this up their sleeves.
     
    I’m no conspiracy theorist. But it bothers me a lot that Whitacre left before the IPO, and Carlyle Group’s Akerson, with strong ties to Saudi Arabia, now runs the show.
     
    I know the Feds want out, the taxpayers want out, but this is just wrong. If this is the play, Americans will spit on GM’s inevitably rotting carcass in the desert.

  • avatar
    bomberpete

    Crosley, if you have that much hate for Obama that you actually WANT this to happen, your motives are beyond politics. Not only is it unpatriotic, you have a problem with who he is

  • avatar
    tparkit

    Americans have not forgotten 911, nor who was behind it. The Saudi scum got off scott-free; part of their wealth will go down with GM’s death-spiral if they are stupid enough to buy into the Government Motors trainwreck. I hope they do.

    Further, this is bad optics for Team Obama. They would look like they are dismantling America (which they are), and such a clear symbol of their transnationalism, cronyism and statist maurading would serve as a rallying point. It is also badly timed, coming as it does in a political era in which Tea Party-style conservatism is gathering momentum with each passing day.

  • avatar
    Boff

    When I first saw the headline, what popped into my head was the notion of GM being bought by the Government of Alberta.
     
    I’d be fascinated to see how THAT would play in Peoria…

  • avatar
    Daanii2

    Many of the comments seem to look past one key point here.

    That is, GM is going public. These foreign funds are being asked by GM’s underwriters to buy stock in a public company. They will likely have ownership interests in the single digit percentages. Probably even well below 1%. Most likely no one of these funds will ever have more than 5% ownership, due to the issues that brings.

    You would think from the fulminating comments here that a controlling interest in GM was being sold. Or even the whole company. Not so. We’re talking tiny pieces here.

    Any of these foreign companies could, if they chose, buy shares on the open market of Ford, for example, and get just as big of an ownership interest as with GM. That’s what going public means. Anyone — friend, foe or neutral — can buy a public company’s shares.

    • 0 avatar
      gslippy

      Personally, I don’t see the IPO happening for a long time.  GM has little to gain with an IPO right now.

      Or maybe they really believe their own hype, and so by going public the next bankruptcy will happen sooner rather than later.

  • avatar

    the Chinese and Saudis are fronts like Belmont, Schiff, and Morgan. oh, and the bad timing thing? a smokescreen for those benevolent banksters who will be so kind as to take this investment back from the gov’t bath house. silly Americans, don’t believe what you read.

    • 0 avatar
      bomberpete

      Here I was waiting for the real conspiracy theory nuts to come out, and here you are, regurgitating 9/11 and all. And here’s Buickman to complete the picture!
       
      Ed N. wrote a semi-provocative headline, which is his job, and suddenly everyone’s off to the races. There’s no reason to form a lynch mob because we know NOTHING!
       
      I don’t agree with Daanii2’s take on the bailouts, but he makes sense on the GM IPO. The foreign funds won’t get enough to make GM quake in its boots.

  • avatar
    ronald

    A public company is, well, public. How are we supposed to keep people from buying stock in GM, Ford, Apple, Microsoft, whatever?
    And who do you think would have bought up the remains of GM had it been allowed to implode? Probably sovereign wealth funds and the Chinese.
    At this point, we should be happy if the feds get their/our money back. If some people somewhere get pissed (out of ignorance) . . . so what’s new?

  • avatar
    panzerfaust

    I don’t mind at all, I’m all for the Saudi’s throwing their money away on GM-better them than me.  However I wonder what the UAW would think of this?

  • avatar
    cardeveloper

    How about GM get sold to the HIGHEST BIDDER.  Lets return to free market and let CAPITALISM rule.  This government intervention is getting crazy!

  • avatar
    AaronH

    The USA Federal Terrorists-on-the-Potomac are going to keep controlling interest in GM forever anyway.
    Why would the parasite voter’s political psychopaths steal something and then give it back?
    Think!

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