GM Will Buy Back 200 Million Shares of Stock from US Government

General MotorsGMUnited States of America, 1998 > present8 models
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has announced that it will buy back 200 million shares of stock from the US government for $27.50 a share for a total of $5.5 billion. The US Treasury Department that has been the owner of the GM stock says that it will divest itself from all ownership of GM within the next 12 to 15 months depending on market conditions. GM expects the transaction for the 200 million shares to be complete before the end of 2012.

Before the market opened on December 19, GM stock was trading at $25.33, which means that GM is paying a roughly 7.9% premium for the stock.

After this purchase, the Treasury Department will still own roughly 300 million shares of GM, which is about 19% of the company. It will sell these shares in bundles on the open market. Those sales could begin as soon as January 2013, according to GM. 

“This announcement is an important step in bringing closure to the successful auto industry rescue, it further removes the perception of government ownership of GM among customers, and it demonstrates confidence in GM’s progress and our future,” said Dan Akerson, chairman and CEO of GM.

The US government will lose money at least on selling stock to GM. The stock would need to sell for about $50 a share for the US government to break even on its investment.