Citi Views Delphi Sale As A "Slight Positive" (GM)

General Motors Corporation GM announced that it will sell its Delphi Class A Membership Interest back to Delphi for $3.8 billion, Citi reports. “The sale will result in a $1.6 billion Q1 book gain. The Delphi stake sale, in addition to other recent asset sales, brings total Q1 proceeds to $4.8 billion and results in a YE'10 pro-forma cash/securities balance of $31.4 billion,” Citi writes. “The Delphi stake sale is consistent with GM's strategy to divest non-core assets and simplify/strengthen its balance sheet. Our $50 GM price target has been valuing the Delphi stake at $3.5 billion, so the $3.8 billion sale proceeds represent slight upside to our model. “Importantly, the Delphi stake simplifies GM's asset base by removing one component out of a multilayered sum-of-the-parts valuation that some investors have come to view as complex. Liquidating non-core assets therefore simplifies the valuation process and increases GM's flexibility to fund its pension and invest in growing the core automotive business. Overall, we view the Delphi sale as a slight positive.” General Motors closed Thursday at $31.03.