General Motors today said it will purchase 200 million shares of GM common stock held by the U.S. Department of the Treasury for $5.5 billion, or $27.50 per share. The share buyback is part of the Treasury's plan, also announced today, to fully exit its entire holdings of GM stock within 12 to 15 months, subject to market conditions. GM expects the first transaction to close before the end of the year.
After the repurchase, Treasury will continue to own approximately 300 million shares of GM common stock, or approximately 19 percent of the outstanding shares on a fully diluted basis. Government ownership of GM stock was the result of the auto industry rescue plan that began under President George W. Bush in 2008 and was expanded by President Barack Obama in 2009.
Since the rescue, GM has announced investments of more than $7.3 billion in the U.S. and says it has created or retained more than 20,000 jobs.
“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. “We come to work every day grateful that taxpayers from the U.S. and Canada stepped forward to rescue our industry, and determined to show this extraordinary help was worth it,” Akerson said.
The $27.50 per share figure represents an eight-percent premium over the current share price, and was agreed upon after negotiations between GM and Treasury officials. According to the Treasury, the federal government invested a total of $49.5 billion in 2008 and 2009 to help secure GM. Counting this latest buyback, the U.S. Treasury has "more than $28.7 billion" of its original investment.