Filed by General Motors Corporation
Subject Company - General Motors Corporation
and Hughes Electronics Corporation
Pursuant to Rule 425 under the Securities Act of 1933
and Deemed Filed Pursuant to Rule 14a-12
under the Securities Exchange Act of 1934
Commission file No.: 001-00143
GM Announces Plan to Split-off Hughes Electronics
News Corp. to acquire 34% of Hughes for $14 per share
GM to sell its 19.9% interest for $3.8 billion
NEW YORK -- General Motors Corp. and its subsidiary Hughes Electronics
Corp. (NYSE: GM, GMH) today announced that GM intends to split off Hughes, and
simultaneously sell GM's 19.9 percent economic interest in Hughes to News Corp.
(NYSE: NWS, NWS.A) for $14 per share, or approximately $3.8 billion. GM would
receive about $3.1 billion in cash, and the remainder would be paid in News
Corp. preferred American Depositary Receipts (ADRs).
"General Motors is pleased to have reached an agreement with News Corp. that
provides substantial value to our stockholders and puts Hughes in a position to
capitalize on the future growth potential for direct broadcast satellite
television and other related services," said GM President and Chief Executive
Officer Rick Wagoner. "This transaction also offers substantial benefits for
both GM's $1-2/3 stockholders and GM's Class H stockholders. For our GM $1-2/3
common stockholders, the transaction provides a premium for the shares sold by
GM and additional liquidity to GM to further strengthen our balance sheet. It
also allows us to focus on our core automotive operations."
"In addition to enhanced business prospects for Hughes, the Class H stockholder
would receive direct equity interest in Hughes in place of the existing tracking
stock, and a premium for a portion of their current interest in GM Class H
stock," Wagoner continued. "Hughes also would get access to additional
management strength and capital to further expand its business through its
affiliation with News Corp., a successful operator of direct-to-home satellite
systems around the world."
Under terms of the proposed transaction, News Corp. would acquire an additional
14.1 percent stake in Hughes from holders of GM Class H common stock through a
mandatory exchange of a portion of their Hughes common stock received in the
split-off. They would receive News Corp stock and/or cash valued at about $14
per share. This price represents a 22 percent premium over the closing price of
GM Class H common stock based on the closing price of GM Class H stock of $11.48
on Wednesday, April 9, 2003.
The value of News Corp.'s proposed acquisition of a 34 percent equity interest
in Hughes would be approximately $6.6 billion. The total market value of the
Hughes split-off transactions including the shares presently held by GM is about
$17.1 billion based on Wednesday's NYSE closing price.
The number of News Corp. preferred ADRs payable to GM and Hughes stockholders,
based on a fixed-price of $14 per Hughes share, will be adjusted within a collar
range of 20 percent above or below the News Corp. preferred ADR price of $22.40.
Current holders of GM Class H common stock would first exchange their shares for
Hughes common stock on a one-for-one basis, followed immediately by an exchange
of 17.5 percent of the Hughes stock they receive for approximately $14 per share
in cash and/or News Corp. stock. GM would receive a distribution of $275 million
in consideration of the value enhancement for Class H shareholders arising from
the conversion from a tracking stock to an asset based stock.
The GM benefit plans, which currently hold about 330 million shares of Class H
stock, would benefit from the transaction in the same manner as other GM Class H
stockholders.
"This transaction is a win-win situation for Hughes and News Corp. and also for
the residential and commercial customers of Hughes," said Jack Shaw, president
and chief executive officer of Hughes. "Hughes and its operating companies will
be able to further enhance their strong management team and be in a much better
position to achieve profitable growth and maximize cash flow. The affiliation
with News Corp. should also strengthen Hughes' competitiveness while enhancing
its commitment to excellence to our valued customers."
The transaction is subject to a number of conditions, including approval by a
majority of each class of GM stockholders - GM $1-2/3 and GM Class H - voting
both as separate classes and together as a single class. The transaction, which
has been approved by the GM, Hughes and News Corp. boards of directors, remains
subject to regulatory clearance under the Hart-Scott-Rodino Act and by the
Federal Communications Commission. Completion of the transaction is also
contingent on the receipt of a favorable ruling from the Internal Revenue
Service that the split-off of Hughes from GM would be tax-free to GM and its
stockholders for U.S. Federal Income Tax purposes. The mandatory exchange of
approximately 17.5 percent of the shares of Hughes common stock distributed to
Class H stockholders for cash and/or News Corp. ADRs would be taxable to the
Hughes stockholders at the time. The transaction is currently expected to close
in late 2003 or early 2004.
Rupert Murdoch, chairman and chief executive of News Corp., would become
chairman of Hughes, and Chase Carey, who is currently serving as an advisor to
News Corp., would become president and chief executive officer of Hughes. Eddy
Hartenstein, Hughes senior executive vice president, would be named vice
chairman of Hughes. Hughes would have 11 directors, the majority of which would
be independent directors.
The Hughes board would consist of Murdoch, Carey, News Corp. and Fox
Entertainment Group President and Chief Operating Officer Peter Chernin, News
Corp. and Fox Entertainment Group Chief Financial Officer Dave DeVoe,
Hartenstein and six independent directors, including Neal Austrian, former
president and chief operating officer of the National Football League; James
Cornelius, chairman of Guidant Corp.; Charles Lee, chairman of Verizon
Communications Inc.; Peter Lund, former president and chief executive officer of
CBS; John Thornton, president of Goldman Sachs, and another director to be named
at a later date.
Hughes would continue to be based in El Segundo, Calif. Hughes and News Corp.
plan to file registration statements in connection with the transaction and GM
will distribute a proxy statement/prospectus to all GM common stock stockholders
in connection with the transaction. Investors are urged to read the proxy
statement/prospectus when it becomes available because it will contain important
information about GM, Hughes and News Corp. and the transaction.
Hughes, a world-leading provider of digital television entertainment, broadband
satellite networks and services, and global video and data broadcasting, is a
unit of General Motors Corporation. The earnings of GM attributable to Hughes
are used to calculate the earnings attributable to the GM Class H stock.
General Motors, the world's largest vehicle manufacturer, designs, builds and
markets cars and trucks worldwide and has been the global automotive sales
leader since 1931. GM employs about 350,000 people around the world. More GM
information can be found at www.gm.com.
# # #
Note to editors:
SCHEDULE OF ACTIVITIES REGARDING
GM/HUGHES/NEWS CORP. ANNOUNCEMENT
General Motors, Hughes and News Corp. will conduct a media conference call on
Wednesday April 9, 2003 at 5:30 p.m. EDT to discuss the transaction.
Media may listen to this meeting and participate in the question-and-answer
session by dialing 888-790-2023 (U.S.) or 712-271-0788 (international). The
passcode for this event is "press." This event will be webcast live on the
Internet via a hot link on GM Media OnLine (http://media.gm.com ). The webcast
also will be broadcast live on the Hughes web site at www.hughes.com.
A taped replay will be available: Please dial 800-839-2808 (U.S.) 402-998-0857
(international).
On Thursday, April 10, 2003, GM, Hughes and News Corp. will hold separate
conference calls for analysts and investors to discuss the transaction and
answer questions.
The News Corp. analyst teleconference will begin at 8:30 a.m. EDT. Investors may
participate by calling 888-592-6705 or 712-271-0119. Media may participate in a
listen-only mode by calling the same number.
The GM investor teleconference will begin at 9:30 a.m. EDT. Investors may
participate by calling 212-271-4571. Media may participate in a listen-only mode
by calling the same number. A taped replay will be available at 800-633-8284
(U.S) and 402-977-9140 (international). The access code for both phone numbers
is 211-404-56.
The Hughes investor teleconference will begin at 10:30 a.m. EDT. Investors may
participate by calling 800-589-4298 (U.S.) or 719-457-2663 (international),
passcode 612-428. Media may participate in a listen-only mode by calling the
same number. A taped replay will be available at 719-457-0820 (U.S). The access
code for both phone numbers is 612-428.
--------------------
In connection with the proposed transactions, General Motors Corporation ("GM"),
Hughes Electronics Corporation ("Hughes") and The News Corporation Limited
("News") intend to file relevant materials with the Securities and Exchange
Commission ("SEC"), including one or more registration statement(s) that contain
a prospectus and proxy/consent solicitation statement. Because those documents
will contain important information, holders of GM $1-2/3 common stock and GM
Class H common stock are urged to read them, if and when they become available.
When filed with the SEC, they will be available for free (along with any other
documents and reports filed by GM, Hughes or News with the SEC) at the SEC's
website, www.sec.gov, and GM stockholders will receive information at an
appropriate time on how to obtain transaction-related documents for free from
GM. Such documents are not currently available.
GM and its directors and executive officers and Hughes and certain of its
executive officers may be deemed to be participants in the solicitation of
proxies or consents from the holders of GM $1-2/3 common stock and GM Class H
common stock in connection with the proposed transactions. Information about the
directors and executive officers of GM and their ownership of GM stock is set
forth in the proxy statement for GM's 2002 annual meeting of shareholders filed
with the SEC and available free of charge at the SEC's website at www.sec.gov.
Investors may obtain additional information regarding the interests of such
participants by reading the prospectus and proxy/consent solicitation statement
if and when it becomes available.
Participants in GM's solicitation may also be deemed to include the following
persons whose interests in GM are not described in the proxy statement for GM's
2002 annual meeting:
Jack A. Shaw Chief Executive Officer, Hughes
Roxanne S. Austin Executive VP, Hughes; President and COO, DIRECTV
Patrick T. Doyle Corporate VP and Treasurer, Hughes
Michael J. Gaines Corporate VP and CFO, Hughes
Sandra A. Harrison Senior VP, Hughes
Eddy W. Hartenstein Senior Executive VP, Hughes; Chairman, DIRECTV
Larry D. Hunter Senior VP and General Counsel
Mr. Shaw beneficially owns 4,084 shares of GM $1-2/3 common stock and 2,244,987
shares of GM Class H common stock. Ms. Austin beneficially owns 3,293 shares of
GM $1-2/3 common stock and 1,632,071 shares of GM Class H common stock. Mr.
Doyle beneficially owns 746 shares of GM $1-2/3 common stock and 511,149 shares
of GM Class H common stock. Mr. Gaines beneficially owns 482 shares of GM $1-2/3
common stock and 298,745 shares of GM Class H common stock. Ms. Harrison
beneficially owns 1,632 shares of GM $1-2/3 common stock and 916,136 shares of
GM Class H common stock. Mr. Hartenstein beneficially owns 3,036 shares of GM
$1-2/3 common stock and 1,962,614 shares of GM Class H common stock. Mr. Hunter
beneficially owns 0 shares of GM $1-2/3 common stock and 485,130 shares of GM
Class H common stock. The above ownership information includes shares that are
purchasable under options that are exercisable within 60 days of April 9, 2003.
In addition, each of Mr. Shaw, Ms. Austin, Mr. Doyle, Mr. Gaines, Ms. Harrison,
Mr. Hartenstein and Mr. Hunter holds options to acquire shares of GM Class H
common stock that are not exercisable within 60 days of April 9, 2003.
Each of Mr. Shaw, Ms. Austin, Mr. Doyle, Mr. Gaines, Ms. Harrison, Mr.
Hartenstein and Mr. Hunter has a severance agreement with Hughes that provides
for severance in the event of an involuntary termination after a change in
control, and each also has a retention agreement that provides for certain
payments in the event of a change in control.
Investors may obtain additional information regarding the interests of the
participants by reading the prospectuses and proxy/solicitation statements if
and when they become available. This communication shall not constitute an offer
to sell or the solicitation of an offer to buy any securities, nor shall there
be any sale of securities in any jurisdiction in which such offer, solicitation
or sale would be unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. No offering of securities shall be
made except by means of a prospectus meeting the requirements of Section 10 of
the Securities Act of 1933, as amended.
Materials included in this document contain "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors that could cause actual results to be materially different from
historical results or from any future results expressed or implied by such
forward-looking statements. The factors that could cause actual results of GM,
Hughes and News to differ materially, many of which are beyond the control of
GM, Hughes or News include, but are not limited to, the following: (1) operating
costs, customer loss and business disruption, including, without limitation,
difficulties in maintaining relationships with employees, customers, clients or
suppliers, may be greater than expected following the transaction; (2) the
regulatory approvals required for the transaction may not be obtained on the
terms expected or on the anticipated schedule; (3) the effects of legislative
and regulatory changes; (4) an inability to retain necessary authorizations from
the FCC; (5) an increase in competition from cable as a result of digital cable
or otherwise, direct broadcast satellite, other satellite system operators, and
other providers of subscription television services; (6) the introduction of new
technologies and competitors into the subscription television business; (7)
changes in labor, programming, equipment and capital costs; (8) future
acquisitions, strategic partnerships and divestitures; (9) general business and
economic conditions; and (10) other risks described from time to time in
periodic reports filed by GM, Hughes or News with the SEC. You are urged to
consider statements that include the words "may," "will," "would," "could,"
"should," "believes," "estimates," "projects," "potential," "expects," "plans,"
"anticipates," "intends," "continues," "forecast," "designed," "goal," or the
negative of those words or other comparable words to be uncertain and
forward-looking. This cautionary statement applies to all forward-looking
statements included in this document.