From: “Shanghai Securities News” by Wu Qiong
Compiler: Fund China

American automobile industry sinking VS reliving Detroit reopening of brilliant dream.

Cerberus Capital Management to the Apache Lusaka to the management company, an international private fund as the eagle as “ransacking” the verge of bankruptcy in the auto manufacturers assets. In recent years, production of finished cars and auto parts magnate giant merger case, General Motors, Maigena and other participants have lost. What is the global auto giants lost acquisition opportunities? What is the global auto giants watch Wall Street “speculators” were skelter. These “Wall Street in front of the barbarians” looking at the next one will be auto Who?

Cerberus Capital Management is a terrible name. In Greek mythology, Cerberus means “three head hell watchdogs.” Now this “hell watchdog” to watch the global auto assets.

July, Cerberus Capital Management again declared : 10 billion dollars to acquire the world’s largest chassis supplier Tower Automotive components company. Thus, the huge Cerberus automobile empire has been established : an auto enterprises — Chrysler (formerly the American Automobile giants three one), two automobile financing companies — General Motors, Chrysler Financial and automobile financing companies (whose business ranks first in the world), 3 auto-parts enterprises.

If the theory of age, the 15-year-old Cerberus Capital Management or the Xiaomaohai starts. And its acquisition of a company car, older than he was, as Chrysler Motor Corporation has over 80 years old.

And Cerberus Capital Management in automobile asset acquisition battle the same fair wind, There Apache Lusaka management companies of the consortium. The recent success of the consortium bought the global auto parts giant Delphi’s major shareholder.

Auto has too many problems to tackle,Private Fund filthy rich.

What are these “Wall Street in front of the barbarians” painless to General Motors, Maigena defeated, and in a short period of a long history of “auto baron” at capsule?

In several cars acquisition case, the automobile giants in the bid far below the Private Fund.

Former President of Delphi China, the current president of the Lean Enterprise China’s Zhao Keqiang, “Automobile giants may think that this (merger) is not fun and games, the resistance is particularly great. The market had also not as good as expected, it will finally has to give up. resistance mainly from : valuation, and the ability to raise cash.

“Acquisition targets on the target valuation method will be different. The enterprises may be lost to the asset management company is one of the causes. “Water Finance Group Managing Director of the Shanghai representative office of Zh ang Zhihao said : “Once the strategic investors that the industry has a chance to integration, He not only on the basis of price-earnings ratio valuations, and more likely to consider future after the listing, the rate of return on investment. As a result, strategic investors bid usually higher than that of non-strategic investors. ”

Cerberus Capital Management claimed that he has the patience of strategic holders.

Another indisputable fact is that all over the world, the general scale of the company’s economic strength below Private Fund. If addressed the ability to raise cash, the troubled auto giants is not even compare with the private fund.

“In the international automotive industry overall downturn, there will never be more powerful buyers. “Shao Jun told the Shanghai Securities News,” General Motors, Ford Motor and other auto giants’ Buddha river mud into the sea — ‘ there is not much money to buy other cars assets. ”

In 2006, General Motors net loss of two billion U.S. dollars, compared with 2005’s 10.4 billion U.S. dollars loss narrowed, it is still attempting to find a difficult time losing battle; Ford Motor loss of 12.613 billion U.S. dollars. compared to a loss in 2005 increased by 21 billion dollars.

With the motor giants has too many problems to tackle the contrary, Private Fund has a strong financing ability.

American Multicultural International Investment chairman Lin Fuyuan pointed out that the international private placement rate of return is very alarming, It is said that its average annual net rate of return as high as 37.5%. In such a high rate of return, the International Private companies like magnets to attract huge amounts of funds.

Detroit sinking VS The reopening of brilliant dreams.

When Chrysler was Cerberus Capital Management Co., an approach similar to the news of the discovery spread, Chrysler former president Lee Yakeka telephone number was Dabo. These calls a controversial point : these international Private Fund will destroy the American Automobile industry? Or to lead the Detroit motor vehicles are again to glory?

Many pairs of Private Fund do not have good feelings toward automobile believe that these transactions as if from hell transactions. Especially in the United Automobile union President Ron Gettelfinger view, Cerberus Capital Management is only a capital operation, Chrysler will be the future of its “stripping - sale.”

Li Yakeka belonged to “restart the brilliant Dream” camp, Chrysler optimistic about its current CEO Tom Lasuoda and Cerberus Capital Management of the portfolio. Yakeka But Lee also pointed out that Chrysler’s future depends on the fate of the desktop upload Cerberus handed its power.

Cerberus Capital Management Corporation chairman, the United States Treasury Secretary John Snow before the incident, Lee is undoubtedly the best Yakeka response : Cerberus Capital Management Corporation and this area is different from other people. We and General Electric have in common, that is, we will give management enough time to implement their long-term strategy, avoid rush achieve profitable quarter.

Boasted, “our business cards, our signature is’ patient capital ‘”, Snow even bluntly said, “Cerberus than those in the Wall Street made a fortune from the artists more like General Electric.”

If Snow said intervene on behalf of the majority of the automobile industry of private funds, perhaps the American Automobile industry was concerned can breathe a sigh of relief. Because in the majority opinion, the United States auto industry is not seriously ill and can be cured if the right remedy.

“United States automobile manufacturing giants not suffer the inefficiencies, but historical cost. “Lee Yakeka that” the staff of the huge cost of medical insurance and pension fund burden, Chrysler each car to increase the average cost of 1,500 U.S. dollars. ”

This is not a phenomenon unique to Chrysler. According to the statistics, the United States auto industry workers average hourly wage nearly 25 U.S. dollars, while in China the figure was about one U.S. dollars.

Jingyi China Enterprises CEO Zhao Keqiang will come up with another one prescription — control logistics cost.

“Logistics costs high, The United States also contributed to the automobile industry because of the high cost. It is precisely because of the logistics better control costs, Japan’s overall auto production costs lower than before the American Automobile enterprises, its profitability higher than before the American Automobile enterprises. “Zhao Keqiang, “labor cost accounts for the cost of 25 to 30%. cost control properly enterprises, its labor costs 28% in the following, such as Toyota Motor; If the labor costs of more than 30%, the company is basically losses, If the three major U.S. auto giants. ”

Now, the re-opening of the American Automobile Industry brilliant a key referred to the capital in the hands of the management companies. Perhaps in a smart capital management experts operation, the United States auto industry is expected to thin success recycling similar to a General Electric model auto in the United States.

But all have doubts.

“Cerberus Capital Management companies need to consider the ability of integration. These bought auto assets after how to digest? “Zhao Keqiang said,” In addition, the management team is also very important. coming from the person who knows the business the same as the management of these companies, or by the new coming in who know the ropes beginning? ”

If a capital management companies have a victory, the Detroit auto rejuvenation has joined the Forces Nouvelles. If it fails, then perhaps as opponents said : The United States auto industry was hit again.

Copyright Fund China 2008.

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