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Activist investor Carl Icahn is reportedly interested in taking another run at Delphi Corp. after a federal judge ordered the bankrupt auto parts supplier to open the sale of its assets to potential bidders, in addition to the previous offer from private-equity firm Platinum Equity.
Icahn's auto-parts company, Federal-Mogul Corp. (NASDAQ: FDML), had held discussions with Delphi, but the Presidential Task Force on the Auto Industry, which was set up by the Obama administration to oversee the restructuring of the U.S. auto industry, preferred the Platinum Equity deal.
Icahn's initial offer for Delphi would have been better both for creditors and the U.S. government, said a source close to Delphi.
Ahead of the expected sale, Delphi is to receive $250 million in funding from General Motors (OTC: GMGMQ), from which the company was spun off in 1999. Delphi is expected to run out of cash by the end of July.
Icahn, who's bid for the Tropicana Casino in Atlantic City was approved by a New Jersey bankruptcy judge last week, holds a 75% stake in Federal-Mogul, which emerged from bankruptcy protection in late 2007. The company recently said it had more than $1.2 billion of available liquidity.
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Reader Comments (Page 1 of 1)
6-16-2009 @ 3:47PM
stfile said...
Carl Icahn is interested in Automotive and his pride.
He still has a stake in Lear (LEA), a quality automotive company with a clean product. Lear sold off its non-profitable group and has retained the seating and electronics group. I see the best fit with Federal-Mogul as Lear. Federal-Mogul has over $1.2B, there are lots of synergies; the value of Lear is less than $500M. With turn about being fair play; purchasing Lear for $3.60 vs. the $36 from one year ago this month. This will be the best slap in the face to Mr. Pzena and justice for Mr. Icahn. Mr. Pzena fought the takeover of Lear last year saying that the $36 price was undervalued.
Secondly, the Delphi is no longer worth what it was as GM is bringing in-house the prize business as part of its financing agreement. I do not see the rational for a buy.