Veteran Morgan Stanley auto analyst Adam Jonas caused a recent stir when he suggested that General Motors reverse course and sell its Opel affiliate rather than try to save it. Reason: its potential damage to the rest of GM. Seeing what he described as “a significant deterioration in the European car market and widening operating losses,” Jonas called Opel “the single biggest threat to GM’s long term financial health and sustainability.”
Such an amputation would not come cheaply. Jonas figures that the cash cost of a separation would be $7 billion to $13 billion, but he believes that ultimately it would drive a more than 50% appreciation to GM’s stock by driving earnings per share up nearly a dollar (or 20%).
Selling Opel would be harsh medicine, but other automakers have prospered after dumping money-losing operations. Jonas cites two similar transactions in his report, but there have been a half dozen others in the past 30 years. Here’s a look at how they turned out:
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