AFSCME 3357-HOF'S BLOG

From the "So Crazy it Just Might Work" file:
ExxonMobil to Buy General Motors?

Thetruthaboutcars.com has posted what it calls its "Wild ass rumor of the day". The rumor is that ExxonMobil will buy General Motors. Why would ExxonMobil (or anyone) buy GM? For almost any other buyer, it wouldn't make sense. To complete a turnaround, General Motors will need tens of billions in new capital. Capital is in short supply these days.

Nevertheless, ExxonMobil is sitting on $38 billion in cash and has been buying up its own stock at the rate of $8 billion per quarter. With the recent stock market slide, GM's total market capitalization (the total value of its stock), is only $5 billion. For that price, and for taking on the sugar-daddy role for those economically dependent upon General Motors, Exxon might buy enough political support to defeat any proposed windfall profits tax. Through what it saves on windfall profits taxes alone for a year, Exxon would be guaranteed a net positive return on the investment. In one fell swoop, Exxon's credit would lower GM's cost of borrowing and breath new life into its financing arm.

Yeah, this deal seems ridiculous upon first look, but on second look, it has some real possibilities as a win-win venture.