GM's Whitacre Steps Down as CEO, Replaced by Akerson
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.”
Akerson has been on GM’s board since July 2009 and previously served as chairman and CEO of XO Communications, Nextel Communications and General Instrument Corp. He currently is on the board of American Express Co.
Changing chief executives now indicates that GM won’t have to do so again in the near future, said Joe Phillippi, principal of AutoTrends Inc., a consulting firm in Short Hills, New Jersey.
“He’s only 61, he’s got a 9- or 10-year run if he opts to stay that long,” Phillippi said.
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’s vision of simplifying the business, of giving people the authority and accountability to do their jobs and keeping them focused on designing, building and selling the world’s best vehicles has served a new GM extremely well,” Akerson said today on a conference call.
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.”
Whitacre said GM’s board had been aware that he planned to leave after turning the company around and that he has accomplished what he set out to do.
GM probably will file an IPO registration statement with the U.S. Securities and Exchange Commission tomorrow or possibly by Aug. 16, said a person familiar with the plan who asked not to be named because the discussions are private.
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.
The government could be completely out of GM “much, much sooner” than the eight years the government had originally anticipated, said Steven Rattner, the former head of President Barack Obama’s automotive task force.
“Given the extraordinary turnaround -- frankly, faster and better than what we had imagined -- I think the IPO could be very successful if the overall markets cooperate,” Rattner said today in an interview on Bloomberg Television’s “InBusiness with Margaret Brennan.”
Still, the offering may be happening “a tad earlier than people would like” and would have been better if GM had more than two profitable quarters in the books, he said.
GM also has obtained a revolving line of credit of as much as $5 billion 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.
GM’s 8.375 percent bonds due July 2033 fell 0.25 cents, or 0.7 percent, to 35.25 cents on the dollar at 1:40 p.m. in New York, according to Trace, the bond-pricing service of the Financial Industry Regulatory Authority.
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,” AutoTrends’ Phillippi said. “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.
One of Akerson’s main tasks will be to turn around the company’s European operations, Phillippi said. The unit posted a $160 million loss in the second quarter after a $506 million loss in the previous three months.
The automaker expects to break even in Europe next year, Chris Liddell, chief financial officer, said during an interview on Bloomberg Television’s “In the Loop.”