Tag: Buyouts

By on June 27, 2020

Always eager to slash delivery costs — especially if the government opts to stop subsidizing the company via the U.S. Postal Service — Amazon has been getting chummy with EV startups. It’s also begun exploring new business opportunities in regard to food delivery and ride hailing, resulting in sizable investments into both sectors.

On Friday, Amazon announced it will acquire California-based Zoox to help it further those goals. Coming off a staffing reduction of about 10 percent to contend with the pandemic, the company is currently focused on delivering an symmetrical, self-driving, zero-emissions vehicle that can compete on the currently nonexistent robo-taxi market. While the world’s 13th largest company (by revenue) seems like it would make good use of the property to advance its autonomous delivery program, corporate messaging seems to indicate Amazon is more interested in Zoox’s expertise in people moving.  (Read More…)

By on January 29, 2020

In an effort to reduce expenses and lower its headcount, an embattled Nissan is offering buyouts to its U.S. employees.

It’s rumored that Nissan plans to eliminate thousands of white-collar jobs and shutter several global factories as part of its effort to improve the company balance sheet. Going into 2020 weak and not expecting to make any money, the automaker is turning its focus to restructuring for at least the next 24 months.

“To adapt to current business needs and improve efficiencies, Nissan will offer voluntary separation packages to eligible U.S.-based employees,” the company said in a statement.  (Read More…)

By on October 31, 2018

Wednesday morning, General Motors announced third-quarter 2018 earnings “reflecting profitability in all core operating segments.” Operating profits were at $2.5 billion, with North American profit margins hovering around 10.2 percent thanks to healthy truck sales. All in all, things were looking pretty good.

Then GM announced a plan to extend buyouts to salaried employees in the region with 12 or more years experience in order to cut costs. Roughly 18,000 salaried employees are said to be eligible for voluntary severance packages. The reason? General Motors says it wants to do this while the company is still healthy, which sounds like a pretty strong hint that bad times are ahead.  (Read More…)

By on October 11, 2018

BMW logo emblem badge

Now that China has relaxed its joint-ownership mandates, BMW has announced that it will procure a majority stake in its venture with Brilliance Automotive. The German firm will be the first foreign automaker to have majority control of its business in the region.

Being first will not come cheaply, however. It will cost BMW $4.2 billion to assume control with a majority stake of 75 percent of the business — albeit as part of a larger deal. All the manufacturer has to do is come up with the funds and wait until 2022, when rules limiting foreign ownership for all Chinese auto ventures are officially lifted.  (Read More…)

By on August 13, 2018

Last week, Tesla CEO Elon Musk announced his intention to take the automaker private. But speculation quickly arose that the claim was just a clever ploy to drive up the company’s share price and burn short sellers, a group Musk seems to have a particular disdain for. This resulted in a shareholder complaint, filed Friday as a securities-fraud class action in federal court in San Francisco, alleging he lied to manipulate shareholder prices.

However, the Securities and Exchange Commission was already investigating the matter at the time of the lawsuit’s filing. While the bulk of the initial investigation involved asking Musk if he was lying, it’s presumably advanced in scope and complexity since then. The lynchpin to the whole issue is whether Tesla actually secured the billions in funding necessary to go private. Even though the CEO said the money is real, he did not specify who would provide it.

That changed on Monday morning, when Musk pointed to oil-rich Saudi Arabia. But it’s not as simple as it sounds.  (Read More…)

By on March 5, 2018

Union officials have stated that roughly 2,500 workers from General Motors’ South Korean unit have applied for a redundancy package offered as part of the automaker’s comprehensive restructuring of the region. The number represents around 15 percent of total GM staff in the area and should make negotiations with one of the most inflexible workers’ unions on the planet that much easier.

Still, what General Motors plans to do with its remaining South Korean factories is unknown, but it has already announced one closure. This has left many wondering if the automaker will abandon production in the country entirely. Fortunately, the Korean workforce has not responded with violence. In fact, many appear to see the writing on the wall, opting to take a buyout rather than cause a fuss during the restructuring.  (Read More…)

By on April 16, 2016

JD Power

J.D. Power and Associates is planning to put more of your possessions under the microscope, now that they’ve taken on new ownership in a deal worth $1.1 billion.

Best known for its vehicle quality ratings, J.D. Power, a unit of McGraw Hill Financial Inc., was snapped up yesterday by London-based XIO Group, according to Reuters (via Automotive News).

The investment firm muscled out a competing private equity firm to land the cash deal, which is expected to close in the third quarter of this year. XIO Group has a strong footprint in China, where it is linked to many high-powered investors. (Read More…)

By on September 27, 2011

One of the legacy costs that GM was not able to reduce in the bailout was pension costs, a whopping $128b obligation as of the end of 2010. And though the plan is “only” underfunded by $10.8b at the end of June according to GM, Kenneth Hackel, president of CT Capital LLC (and author of two textbooks on valuing securities) recently told Bloomberg

The financial risk because of [GM’s pension liability] is higher than people understand. The cold reality is if you used a conservative discount rate and you wanted to close out the plans, you would have to raise about $35 billion.

With GM’s market cap sagging into the low-$30b range (currently around $34b), the risk of pension liabilities growing larger than GM’s market capitalization is very real. And as lower interest rates and a weak stock market reduce pension fund returns, the obligations grow, in turn putting pressure on GM’s stock price. And it’s not like nobody saw this coming: a GAO report released in April 2010 issued dire warnings about the state of GM and Chrysler’s pension obligations. Now, according to the ace reporters at Reuters, GM and the UAW have hashed out a buyout deal giving workers the option of being bought out of their pensions. Which has us dying to know: what’s a UAW pension worth in cash?

(Read More…)

By on May 19, 2010

When the music finally stopped at Old GM, the UAW’s VEBA fund was left holding a lot of IOUs. On those merits, the union’s benefit trust was given about 17.5 percent of the equity in the bailed-out and re-organized New GM. UAW leadership has always maintained that having its membership’s benefits staked on the company’s financial performance would not change its mission, and that VEBA’s representative on GM’s board, Steve Girsky, would operate free from union influence. And one hopes he would, considering he’s being paid well to advise CEO Ed Whitacre. But the tension between GM’s IPO sprint and the UAW’s non-VEBA interests never goes away, and the Wall Street Journal [sub] is reporting that the latest spat is over the old hobbyhorse of buyouts.

(Read More…)

By on December 21, 2009

Deja vu... British workers protest Ford/Visteon shenanigans (courtesy: bbc.co.uk)

It’s been a while since we’ve heard the word “buyout” echoing out of Detroit, as 2008 marked the year in which auto industry employees finally started to be fired like everyone else: without a hefty severance kiss-off. Ford, on the other hand, did not get a shot at free house-cleaning in bankruptcy court, so it’s bringing back buyouts. According to Market Watch, the Blue Oval is offering blue-collar employees a $50,000 lump sum payment and a $25,000 voucher for a new vehicle or another $20,000 lump sum, as well as six months of health insurance coverage. There’s even an extra $40k for workers of “a certain age.” But this being Detroit, employee benefits are either feast or famine. While Ford’s workers are being offered cash for their jobs, the former Ford parts division Visteon announced today that it is seeking to dump pensions for 21,000 retirees in bankruptcy, following Delphi into yet another stealthy yet popular form of indirect automaker bailout.

(Read More…)

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