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News Corp. Talks for Hughes Deal Are GM Priority

Telecommunications: CEO tells shareholders the door remains open to alternative proposals for the satellite firm and its DirecTV unit.

June 06, 2001|MICHAEL ELLIS | REUTERS

WILMINGTON, Del. — General Motors Corp. Chief Executive G. Richard Wagoner said Tuesday that negotiations to combine its Hughes Electronics Corp. satellite unit with a division of media conglomerate News Corp. are a "top priority," but the auto maker would consider alternatives.

GM's board approved formal talks a month ago with Rupert Murdoch's News Corp., which has coveted Hughes' DirecTV unit as a U.S. component to its Sky Global network of satellite television services that stretch from Europe to Asia to Latin America.

"We are engaged in detailed negotiations with News Corp. on a proposal to combine Hughes with Sky Global Networks," Wagoner said Tuesday at GM's annual shareholders meeting. "These negotiations are our top priority right now, though we will remain open to consider alternative proposals."

EchoStar Communications Corp., the second-largest satellite television provider, repeatedly has expressed interest in acquiring DirecTV, the largest satellite television provider with nearly 10 million subscribers.

Littleton, Colo.-based EchoStar is believed to be gathering cash and partners for a formal bid, although it has yet to disclose one.

Wagoner told reporters that the company has listened to proposals from EchoStar, but has not entered formal negotiations with the company.

"We have continued to listen to their ideas and make sure we understand what their proposals are. But I don't want to confuse those with negotiating teams doing due diligence, which is really the state of efforts going on with News Corp.," Wagoner said.

At the meeting, GM shareholders narrowly defeated a proposal to require the company to hold a shareholder vote before it could adopt a so-called poison pill, which could be used to block a takeover of the company.

Also, a small group of hard-line union members with South Korea's Daewoo Motor Co. greeted shareholders outside the meeting with a letter opposing GM's proposed takeover of bankrupt Daewoo.

Joo-Hee Kim, an international secretary with the Korean Metal Workers' Federation, told reporters that the union, linked to the militant 500,000-member Korea Confederation of Trade Unions, was prepared to call strikes at Daewoo plants and at other Korean auto makers if GM succeeded in taking over Daewoo.

Meanwhile, in South Korea, about 400 moderate union members and white-collar Daewoo workers rallied in front of the KMWF union offices, demanding that the union leadership soften its opposition of the proposed sale to GM.

Shares of GM rose 92 cents to close at $58.92, while shares of Hughes, which trade as a GM tracking stock, dropped 10 cents to $23.75, both on the New York Stock Exchange.

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