Delphi is cancelling the $477 million acquisition of its global steering and half-shaft operations by Platinum Equity that the two sides had agreed on in December 2007, and will instead sell the business to former parent company General Motors.
Platinum had previously struck a deal to purchase the assets for $190 million, with Delphi also receiving another $257 million from GM. However, the two sides have been unable to come to terms amid the financial setbacks in the automobile industry.
“For almost two years, we have worked hard to bring this transaction to the finish line,” Platinum Equity principal Mark Barnhill said. “Despite the best efforts of all parties, an agreement acceptable to all sides could not be reached. We have a strong interest in being involved in efforts to revitalize the automotive industry, and will continue to look for opportunities in the automotive space.”
Delphi Steering will become a stand-alone business under General Motors, which is looking to take control of more of its vehicle production. According to Delphi's annual report filed with the Securities and Exchange Commission, the deal is subject to GM receiving money from the US Treasury. The two sides will seek to close the deal on or before April 30, according to the annual report. Delphi was spun out by GM as a separate company in 1999 and declared bankruptcy in 2005.
Platinum has acquired several corporate orphans in the automobile sector, including American Racing Equipment and the automotive glass-making divisions of PPG Industries. It is currently competing with a Chinese company to purchase GM’s Hummer sport-utility vehicle unit, after closing its newest fund on $2.8 billion last September.