On Wednesday, December 19th, General Motors announced its plan to buy back 200 million shares from the U.S. treasury for $5.5 billion, or $27.50 per share.
Wanting to be rid of the American automaker’s shares in 12 to 15 months, the treasury plans to sell off all of its stock in General Motors. The treasury will sell its remaining shares into the market after GM purchases its 200 million. General Motors share buyback is expected to be completed by year’s end, where the treasury will begin selling the rest of the stock in January, 2013. The treasury will continue to own 300 million shares of GM common stock, or about 19 percent of the outstanding shares on a fully diluted basis after the buyback.
“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 U.S. treasury became the owners of the shares back in 2008 when the government bailed out General Motors, saving them from bankruptcy, in an effort to keep the American auto industry from going bankrupt.