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23 December, 2012 11:54 am : Mtl Auto-Parts
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GM buys back its own stock

General Motors will repurchase 200 million shares of its own stock currently held by the U.S. Treasury, with the White House announcing plans to sell off its remaining 300 million shares within the next 12 to 15 months. The automaker will pay $27.50 for the shares it will acquire, a 7.9% premium over the $25.49 closing price on December 18, 2012 but that is also a sharp discount from the $33 price set during GM’s initial public offering in November 2010. And it means taxpayers will lose billions on the sale. “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 automaker noted that it will take a $400 million charge against earnings during the fourth quarter in connection with the stock repurchase. As recently as a week ago, during a holiday event with reporters, CEO Akerson indicated his desire to have the government sell off its stake though he gave no indication any move was imminent.  Most analysts had not expected an announcement until sometime in early 2013. Treasury has been under strong pressure to announce an exit plan, an issue that failed GOP presidential candidate Mitt Romney repeated frequently during his campaign. He called on the White House to sell off its stake last summer, though at that point GM was trading as low as $18.72 a share.  At that price, the government would have received about $1.5 billion less than it will now get, a total of $5.5 billion for the initial 200 million share sell-off. 


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