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GM to buy back 200M shares as part of gov't exit

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. The Associated Press
Wednesday, December 19, 2012 - 10:50 am

DETROIT – The Treasury plans to sell its remaining stake in General Motors over the next 15 months, allowing the automaker to shed the stigma of being partly owned by the U.S. government.

GM said Wednesday it will spend $5.5 billion to buy back 200 million shares from the Treasury by the end of this year. The government, in turn, plans to sell its remaining stake of 300 million shares on the open market over the next 12 to 15 months.

GM will pay $27.50 for each share, about an 8 percent premium over Tuesday's closing price of $25.49. The shares shot up about 7 percent to $27.30 in Wednesday morning trading.

The government is almost certain to lose billions on the $49.5 billion bailout that saved GM from being auctioned off in pieces during the financial crisis in 2008 and 2009. The Treasury says it will have recouped about $28.7 billion after GM completes its buyback. So, to break even, Treasury would have to sell the remaining 300 million shares for average of about $70 each.