12 August 2010

GM's Whitacre Steps Down as CEO


General Motors Co. Chief Executive Officer Ed Whitacre, who led the largest U.S. automaker from bankruptcy to two straight profitable quarters, will step down as CEO on Sept. 1 and be replaced by director Dan Akerson.

Akerson, 61, also will take over the 68-year-old Whitacre’s role as chairman at the end of the year, Detroit-based GM said today. The 6-foot-4-inch Texan nicknamed “Big Ed” joined the automaker in July 2009, the month it emerged from bankruptcy, and replaced Fritz Henderson as CEO in December.

Akerson, a managing director of the Carlyle Group, will take over GM as it works toward freeing itself from the U.S. government’s 61 percent ownership after last year’s $50 billion taxpayer bailout. The company is seeking to raise $12 billion to $16 billion this year in an initial public offering, said a person familiar with the plan.

“Dan Akerson is a very good person to take the company through the IPO,” Rebecca Lindland, an analyst at IHS Automotive, said on Bloomberg television. “While he hasn’t led a traditional manufacturing company before, he certainly has the credentials to lead any company going through changes in its financial structure.”

Whitacre, known for building AT&T Inc. into the biggest U.S. provider of telephone service, had described steering the nation’s largest automaker after bankruptcy as “a public service.”

“Ed and I share a common vision,” Akerson said today on a conference call.

Second-Quarter Profit

GM today reported second-quarter net income of $1.54 billion as vehicle sales and production increased. Profit rose 44 percent from $1.07 billion in the first three months of the year. Revenue increased 44 percent from a year ago to $33.2 billion on growing sales of the Buick Excelle in China and Chevrolet Equinox in the U.S., the company said today in a statement.

“Results like these make it clear that the new GM is on the right track with good momentum behind us and a bright future ahead of us,” Whitacre said. “And also it gives me a lot of confidence to begin transitioning in new leadership at General Motors.”

GM’s IPO would be the second-largest in U.S. history, behind Visa Inc.’s $19.7 billion initial offering in March 2008. The company aims to sell a fifth of the Treasury’s stake, reducing the U.S. to a minority owner, two people familiar with the plan said in June.

Credit Line

GM also has obtained a $5 billion revolving line of credit from a group of at least 15 banks as of last night New York time, said the person. More than half are named in the draft of the document as underwriters, including Morgan Stanley, JPMorgan Chase & Co., Citigroup Inc., Bank of America Corp. and Credit Suisse Group AG.

The automaker last month agreed to buy subprime lender AmeriCredit Corp. for $3.5 billion to help it reach more customers with leases and loans to borrowers with faulty credit records. Whitacre had wanted to buy or start a lending arm before a fourth-quarter initial public offering, people familiar with the matter said in May.

Akerson has “been involved in every decision that has been made,” said Joe Phillippi, principal of AutoTrends Inc., a consulting firm in Short Hills, New Jersey. “You can say the management moves at GM are as much his as Ed Whitacre’s.”

Akerson is unlikely to start changing GM’s management and is the “least disruptive” of the changes at the top of GM since March 2009, he said.

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