Selling Du Pont's Stock

Ever since June, when the U.S. Supreme Court ruled that Du Pont's 23% stock interest in General Motors Corp. was illegal (TIME, June 17). the Justice Department has been seeking the best way to divorce the two giants. Last week the trustbusters gave the first real hint as to how they will proceed. The one thing Justice will not accept, said Assistant Attorney General Victor Hansen, is one thing Du Pont would probably agree to: a permanent, nonvoting trust for Du Pont's 64 million G.M. shares. This, Du Pont hoped, would remove control without forcing the company to get rid of its stock. Instead, said Hansen, Justice will insist on complete divestiture of a stock package worth $2.7 billion at current market prices.

Though no final decision has been reached, Justice's lawyers will probably demand that Du Pont sell its stock on the open market. But they are not likely to ask Du Pont to dump the entire 64 million shares all at once--something that would not only disrupt the market but also cost Du Pont a $600 million to $700 million capital-gains tax (25%) in one lump. To ease the pinch, the Justice Department favors a more moderate plan, under which Du Pont's stock in G.M. would go into a temporary, nonvoting trust, which in turn would sell it off gradually over a number of years. Such a course would not only satisfy the Government's determination to remove Du Pont from G.M. affairs immediately, but would also help the company with its marketing and capital-gains problems. The stock market would be able to digest the stock more easily, and Du Pont could spread its capital-gains tax over five or possibly ten years. Another possibility, though a slim one, is that Congress may be asked to help take the sting out of the tax bite by special legislation lowering the capital-gains tax for this sale. The Government is expected to present its plan next week to Chicago's Federal Judge Walter La Buy, who originally heard the case and must approve the final settlement.

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