Marks a major milestone in the turnaround of an iconic company
The United States Treasury has agreed to sell a significant share of its stake in auto major General Motors through an initial public offering on the New York Stock Exchange. Through the sale of over 358 million shares that it holds in the company, the U.S. government aims to reduce its stake from 60.8 per cent to 36.9 per cent.
Speaking after the IPO was announced President Barack Obama said that it marked a major milestone in the turnaround of an iconic company and the entire American auto industry. After the sell-off the government would have cut its stake in GM by nearly half, he said, “continuing our disciplined commitment to exit this investment while protecting the American taxpayer.”
Reflecting on his administration's actions to intervene in the auto market at the height of the recession Mr. Obama said that supporting the U.S. auto industry “required tough decisions and shared sacrifices, but it helped save jobs, rescue an industry at the heart of America's manufacturing sector, and make it more competitive for the future.”
The Department of the Treasury said that it had agreed to sell its common stock in GM at $33 per share, as part of GM's initial public offering and if the underwriters' over-allotment option was exercised in full, “the aggregate gross proceeds to Treasury from the offering are expected to be about $13.6 billion, before giving effect to any fees associated with the offering.”
Treasury Secretary Tim Geithner said that the GM IPO was “an important step in the turnaround of the company and for our work to recover taxpayer dollars and exit this investment as soon as practicable.”
At the end of October the Treasury noted that the cumulative return to taxpayers from the sale of GM stock had reached $9.5 billion, in particular, including the GM's repurchase of $2.1 billion of the Series-A preferred stock issued under the Trouble Asset Relief Programme.
Market commentators said that since General Motors had shown that it could be profitable, “a complete exit by the government could happen even within the next two years.”