General Motors Corp. is seeking to acquire some Delphi factories that make key parts for GM and the two companies are set to be in talks on Monday a source familiar with the negotiation proceedings said.
Troy, Mich.-based Delphi has been operating under Chapter 11 bankruptcy protection since October 2005, and like many suppliers is struggling with the shrinking U.S. auto market. The source said GM is worried that the plants could shut down if Delphi runs short of cash, crippling GM's production, the Associated Press reported.
According to the source, whose identity is withheld due to the privacy of the talks, said the talks have been under way for several weeks and may not lead to any takeover of the plants.
In a 1999 agreement GM entered into with Delphi, GM has the option to take back factories. This is likely to spin off Delphi as an independent parts supplier.
Delphi plants make thousands of key parts for the Detroit-based GM's vehicles including its top selling pickup trucks, the Chevrolet Silverado and GMC Sierra.
The interests of the two companies remain intertwined because Delphi is GM's biggest supplier, providing more than 1,000 parts for GM pickup trucks.
Delphi spokesman Lindsey Williams said Monday that the company continues to be in talks with GM — as well as Delphi's debtor-in-possession lenders — as it works to emerge from bankruptcy protection, but will not disclose the nature of those discussions, the AP reported.
The plants the company has been trying to sell are defined as noncore, those that make that make brakes, chassis, instrument panels, door modules and steering components.
According to Williams, Delphi is well on its way to reaching its post-bankruptcy protection goal of eight U.S. plants.
It is not immediately clear how many plants the company currently operates.
In Monday's trading, GM shares slipped 5 cents to $2.79.