General Motors Company (GM) – Selling Delphi stake doesn't make a terd smell any better

General Motors Company (GM)

Alert: GM Sells its Delphi Stake for $3.8 Billion; Slight Positive

What's New? – GM announced that it will sell its Delphi Class A Membership Interest back to Delphi for $3.8 billion. 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.

Delphi Sale a Slight Positive – 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.