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Citigroup and Cerberus Seen in GMAC Bid

January 30, 2006|From Reuters

Hedge fund Cerberus Capital Management and Citigroup Inc. have teamed up to bid for a controlling stake in General Motors Corp.'s GMAC financial services unit, people familiar with the situation said.

A second team of bidders includes Wachovia Corp. and private equity firm Blackstone Group, the people said. Other private equity firms also have toyed with the idea of joining the bidding, other sources said previously.

No decision on a GMAC deal was imminent, sources said over the weekend.

GM said in October that it wanted to sell the GMAC stake to a strategic partner to restore the unit's credit rating to investment-grade status and gain access to cheaper financing.

A sale of a stake in GMAC, which could fetch $10 billion to $15 billion, would give GM a much-needed cash windfall, analysts said.

GM on Thursday reported a worse-than-expected fourth-quarter net loss of $4.8 billion, bringing its total loss for all of 2005 to $8.6 billion. That marked the fifth straight quarterly loss for the world's largest automaker.

GM also has said it may consider strategic alternatives for GMAC's mortgage operation, ResCap, which analysts see as the crown jewel of GMAC, to help preserve ResCap's separate investment-grade rating.

Kohlberg Kravis & Roberts Co. may join with Wachovia to bid on GMAC, the Wall Street Journal reported Saturday.

A private equity consortium led by Kohlberg Kravis & Roberts bought a 60% stake in GMAC's commercial mortgage division in August, leading industry analysts to speculate that the firm might lead a bid for ResCap.

Blackstone, Cerberus, Citigroup, GM, Kohlberg Kravis & Roberts and Wachovia could not be reached for comment.

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