Cerberus, a $16-billion hedge fund founded in 1992, is a turn-around specialist named after the mythical dog that guarded the entrance to the underworld.
Under the terms of the deal, GM will get approximately $10 billion when the transaction closes, probably in the fourth quarter, plus $4 billion over the next three years.
Wagoner said the money would be used to support the company's turnaround plans and strengthen its balance sheet.
This wouldn't be the first time GM has sold valuable assets, including Electronic Data Systems in 1996 and Hughes Electronics in 1997, to fund its auto business, Morgan Stanley analyst Jonathan Steinmetz said in a research note.
GM management has not explained "why this time will be different," Steinmetz said.
Taking a more optimistic view was David Healy of Burnham Securities: "[GM] wouldn't be selling off half the crown jewels if they weren't in trouble, but I think they struck a pretty good deal today."
One reason for the dismal performance of GM's stock Monday may have been some other news announced by the company: its U.S. vehicle sales tumbled 14.6% in March from a year earlier. Ford Motor Co.'s sales also fell 4.6%, but Toyota's rose 6.9%.
GM said its March sales were not as bad as they looked, because the 2005 period featured extensive sales incentives.
"Baloney," responded Sean Egan, managing director of Egan-Jones Ratings Co. in Haverford, Pa. GM "may have reduced incentives last year, but this year they reduced vehicle sticker prices so they would appear more competitive. Whether you lower the price by incentives or an absolute cut doesn't really matter."
Making cars is an economy-of-scale business, Egan said. "GM is losing sales, losing the economy of scale, and slipping further behind. Every other week the company is faced with a crisis. Next: more of the same."
The long-running crisis has led to intense speculation that Wagoner's job might be imperiled.
George Fisher, presiding director of the GM board, said Monday that "while there is still much work to be done, the GM board has great confidence in Rick Wagoner."
