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News Corp., GM Haggling Over DirecTV Deal?

2/12/2001 02:00:00 AM Eastern

EL SEGUNDO, CALIF. -Newspapers were buzzing with speculation last week that News Corp. and General Motors may be nearing a deal to sell all or a portion of GM's Hughes Electronics unit, including gem DirecTV, to the international media giant.

The Financial Times in London reported the two sides had reached a tentative agreement on the sale, but GM quickly tried to silence the reports by issuing a denial indicating that it continues to talk with "multiple parties" about its Hughes Electronics unit.

As reported, one potential scenario for a deal involved GM spinning off Hughes to clear the way for a merger of News Corp.'s Sky Global Networks satellite business into the resulting entity. The independent, publicly traded company would be 64 percent owned by Hughes shareholders, with News Corp. owning the rest. The combined company would be valued at between $60 billion and $70 billion.

News of the preliminary deal sent investors scurrying as share prices of Hughes Electronics dipped 11 percent to $24.75 for each share of the tracking stock, while GM stock dropped $1.97 a share to $56.15 due to apparent investor dissatisfaction with the terms.

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