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AIG, Prudential, General Motors, Ford and Honda

^{Published on 2010-06-03 12:50:05 - Market Wire}
 

CHICAGO--([ BUSINESS WIRE ])--Zacks.com Analyst Blog features: American International Group (NYSE: [ AIG ]), Prudential PLC (NYSE: [ PUK ]), General Motors (OTC: [ MTLQQ ]), Ford Motor Co (NYSE: [ F ]) and Honda Motor Co. (NYSE: [ HMC ]).

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Here are highlights from Tuesdaya™s Analyst Blog:

Prudential-AIG Deal May Collapse

American International Group (NYSE: [ AIG ]) rejected Prudential PLCa™s (NYSE: [ PUK ]) offer price of $30.375 billion to buy AIGa™s Asian life-insurance unit, AIA Group, on June 1, 2010. AIG considers AIA to be a valuable property and is not ready to settle for a lower value, as it believes AIA has other options.

AIG, which is presently operating with $132 billion in government support, will be adversely impacted in the short run if the deal collapses, as it was selling AIA to partly pay back the bailout money to the Federal Reserve, which rescued AIG from collapsing in 2008.

At least 75% of Prudential shareholdersa™ approval was required to proceed with the deal at the value set by AIG. However, the shareholders of Prudential considered the deal to be too expensive. As a result, it intended to slash the original deal value of $35.5 billion by about 15% to $30.0 billion. Prudentiala™s new deal comprised $23 billion cash, 2.16 billion newly issued shares and $2 billion in aggregate principal amount of perpetual tier one notes to be issued by the company. However, AIG considers $30 billion to be too low for AIA.

Prudential's leading shareholder Capital Group, having a 13% stake, was expected to vote in favor of the deal if the price dropped between $31 billion and $32 billion.

GM Continues to Focus on Brazil

General Motors (OTC: [ MTLQQ ]), or GM, has announced its plan to invest R$700 million ($385 million) at its Sao Caetano do Sul plant in Sao Paulo state in Brazil to modernize and expand production. This comes on top of an investment of R$1.4 billion on the same plant announced in March of this year.

The investments will focus on renewing the Chevrolet production line, produce two new models and boost overall output. The plant also manufactures models including Classic, Corsa and Vectra.

The investments are a part of GMa™s plan to increase production capacity and refresh its Chevrolet models in Brazil -- its third largest market after the U.S. and China. The plan entails an investment of R$5 billion ($2.75 billion) and would run until 2012.

Brazil a" Latin America's largest economy a" is a major market for Italy's Fiat, Germany's Volkswagen AG, U.S.-based automakers General Motors and Ford Motor Co (NYSE: [ F ]) and Japana™s Honda Motor Co. (NYSE: [ HMC ]).

Last year, Fiat occupied the dominant position in the Brazilian auto market with 24.49% share, followed by Volkswagen with 22.74% share, GM with 19.79% share, Ford with 10.1% share and Honda with 4.18% share.

Together, GM, Volkswagen and Ford plan to invest a total of R$14.2 billion ($7.8 billion) over a span of years to strengthen their position in Brazil by enhancing production capacity and developing new products.

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