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The timing of the deal could hardly have been worse: GM is coming off a third quarter in which it suffered an operating loss of $338.5 million, and it has announced a drastic slimming-down program that will close ten plants and part of another over three years, affecting 29,000 employees. Last week, just after GM handed over nearly three-quarters of a billion dollars to Perot, the company announced that its November sales were down 9.4% from the same month a year ago. As a result, the company said it would scale back production in three more plants in the coming months, laying off another 4,500 workers out of its current payroll of 812,000.
Many GM watchers were surprised that a gutsy character like Perot seemed to back away from a fight. But Perot maintains that he never wanted to take charge of GM. This year he came to believe that his differences with GM's management were irreconcilable, and he decided that getting out would be preferable to being caught in a dispute that, as Perot put it, "drags on and drags on." It was he who first broached the idea of the buyout last June. The idea was discussed briefly and then dropped.
But the atmosphere at GM did not improve, and Perot's lawyer brought up the buyout again in November. If Perot eventually had to go, he wanted to be sure that he got his money before the beginning of 1987, when tax reform would raise the rate on capital gains. By this time, GM was more than eager to get rid of Perot. The directors had even con sidered dismissing him from the board without buying his shares, but rejected the idea because, according to a source close to the deliberations, they feared a "bloody civil war." On Nov. 25, after 2½ weeks of negotiations, Perot and GM settled on a price for his shares and worked out the details of the deal. One of the more curious terms was that Perot agreed not to criticize GM in the future, under penalty of a $7.5 million fine. Infractions would be judged by a three-person committee, comprised of Perot's personal attorney, a GM executive and a third party agreeable to both sides.
Perot already seems in danger of having to pay the penalty. After the agreement was announced, he appeared to have mixed emotions and maybe even some second thoughts. At a press conference in Dallas, he declared that the buyout was "morally wrong." Said he: "$700 million will buy you a brand spanking new world-class, state-of-the-art car plant and the jobs to go with it." Perot said he would put the money in escrow for two weeks to allow GM's directors time to reconsider their decision, but the board said it had "no intention" of doing so. In any case, Perot maintained that his departure would not solve GM's problems. "GM shot the messenger," he told TIME.