GM offers $200 million in bid to end Axle strike

By Kevin Krolicki and Soyoung Kim

DETROIT (Reuters) - General Motors Corp (GM.N) on Thursday has offered American Axle & Manufacturing Holdings (AXL.N) $200 million in a bid to clinch a speedy resolution of a strike against a key supplier that has run for more than two months.

American Axle, which in ongoing talks has pressed the United Auto Workers union for deep concessions on labor costs, said the GM offer hinged on a quick resolution to the strike.

Analysts said the offer could also clear the way for GM to restart production of hot-selling models like the Chevrolet Malibu and Buick Enclave.

GM said in a filing with the U.S. Securities and Exchange Commission it had agreed to provide American Axle with up to $200 million to help fund buyouts and one-time payouts for returning union workers to accept lower hourly wages.

"We believe that the offer will help bridge the gap between American Axle and the UAW and the two parties will be able to reach a mutually satisfactory settlement in the near future," GM spokesman Dan Flores said.

A UAW spokesman was not available to comment.

American Axle spokeswoman Renee Rogers said the funds GM would provide would not have to be repaid by the supplier, which was spun off from the automaker in 1994.

In addition, GM has not asked for concessional pricing on future component shipments to offset the money it is offering to broker a quick end to the work stoppage, she said.

Shares of American Axle moved higher after the announcement, closing up 2 percent on the New York Stock Exchange. GM shares closed down 1 percent.

Although GM remains American Axle's largest customer and the UAW strike against the supplier shut down most of GM's North American production of large trucks and SUVs, the No. 1 U.S. automaker has said that it had no intention of becoming involved in the dispute.

But by offering $200 million to pay for UAW buyouts at Detroit-based American Axle, GM appears to be gambling it can break a logjam in the talks and clinch agreements to smooth its own labor disputes with the union, one analyst said.

"I think they are very close to agreement. I would be surprised if they don't wrap things up in a week," said IRN Inc analyst Erich Merkle.

DEAL FRAMEWORK IN FOCUS

JP Morgan analyst Himanshu Patel said the $200 million payment could be thought of as equivalent to 23 cents per share in strike-related costs American Axle had avoided.

In a note for clients, he also said it appeared to set the stage for mandatory buyouts for UAW workers and could stoke speculation about what American Axle would have to give back to GM in return.