SACRAMENTO, Calif. (July 19)—New York-based venture capital firm Cerberus Capital Management L.P. has agreed to buy GenCorp Inc.'s GDX Automotive business for $147 million.
The sale, subject to regulatory approvals and other customary closing conditions, is expected to close before the end of November, GenCorp said. The sale price is in line with the firm's book value, as disclosed in GenCorp's second-quarter fiscal results, which showed assets of $319 million—down from $571 million at the end of fiscal 2003—and liabilities at $154 million.
Cerberus Capital is a private equity management firm that specializes in turning around struggling companies. Among its holdings are Air Canada, computer software specialist Baan and ANC Rental Car (Alamo Rent A Car and National Car Rental).
GenCorp disclosed July 12 it was negotiating the sale of the GDX unit and then four days later declared the money-losing unit a discontinued operation and took a $261 million charge against second-quarter earnings to cover the expected loss on the pending divestment.
GenCorp said it decided to divest GDX Automotive because its heavy capital requirements—for restructuring measures and conversion costs for new platforms—combined with the vehicle industry's price stinginess were a drain on its profit potential.