Float values GM's Delphi at $9.6bn

THE WORLD'S largest automotive components supplier arrived on the stock market yesterday as General Motors floated its Delphi Automotive Systems division with a valuation of $9.6bn (pounds 5.8bn).

Initially GM is listing just under 20 per cent of the shares, raising $1.7bn. But it plans to distribute the remainder of the shares to GM shareholders later this year through a demerger.

The initial public offering of 100 million shares, representing 17.7 per cent of Delphi, was priced at $17 a share. The offer was three-and- a-half times subscribed, with institutions applying for 310 million shares and retail investors 150 million shares.

Delphi, which supplies a full range of components to GM factories throughout the world, had sales of $28.4bn last year, ranking it among the top 30 US companies in the Fortune 500. Based in Troy, Michigan, the company has 200,000 employees and operates from 169 sites and a further 40 joint ventures in 36 countries.

In the UK, Delphi employs 1,250 people at six sites - Coventry, Ellesmere Port, Liverpool, Southampton, Luton and Basingstoke. It supplies components ranging from engine parts and instrument clusters to steering columns and electronic systems to Vauxhall's two UK car plants at Ellesmere Port and Luton.

Delphi's chief executive, J T Battenberg III, said the main purposes of floating the company as an independent business was to pick up more sales from vehicle manufacturers other than GM. Historically, rival car makers have been reluctant to buy from a business which is 100 per cent- owned by GM, the world's leading car maker.

For the same reason Ford is also planning a stock market listing and demerger of its in-house automotive components business, Visteon.

Mr Battenberg also said that the flotation would give Delphi greater commercial freedom and mean that it no longer had to compete with other parts of GM for resources to expand and update its facilities.

Paul Fleming, Delphi's UK director, said the company was already much more than an original equipment manufacturer. It also planned to expand its operations to take advantage of the number of car makers that had set up in Britain to take advantage of the European market.

Delphi has already helped Land Rover to produce a new system that enhances the cornering of its models.