This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

GM to Buy Its Shares From U.S. Treasury for $5.5B

DETROIT (TheStreet) -- People who call GM (GM) "Government Motors" are going to have to find another laugh line.

The automaker said Wednesday it will buy 200 million shares of common stock held by the U.S. Treasury for $5.5 billion, or $27.50 a share. The share buyback is part of the Treasury's plan, also announced Tuesday, to sell off its entire holdings of GM stock within 12 to 15 months, subject to market conditions.

The repurchase price of $27.50 a share represents a 7.9% premium over Tuesday's closing price of $25.49. The share buyback is expected to close by the end of the year. The transaction will be accretive to earnings, as GM's total number of diluted shares outstanding will be reduced by about 11%, the automaker said.

In premarket trading Wedneday, GM shares were up $2.37 to $27.86.

In association with the share buyback, GM will also take a charge of abouty $400 million in the fourth quarter, which will be treated as a special item.

The Treasury said it will begin its disposition of its remaining shares as soon as January 2013 and will relinquish governance rights that were included in its secured credit agreement with GM. After the repurchase, the Treasury will continue to own about 300 million common shares of GM, or 19% of outstanding shares.

"This announcement is an important step in bringing closure to the successful auto industry rescue," said GM CEO Dan Akerson, in a prepared statement. "It further removes the perception of government ownership of GM among customers, and it demonstrates confidence in GM's progress and our future."

"We come to work every day grateful that taxpayers from the US and Canada stepped forward to rescue our industry, and determined to show this extraordinary help was worth it," Akerson said.

Chief Financial Officer Dan Ammann said GM will retain "a fortress balance sheet" with estimated liquidity of about $38 million at the end of 2012, following the closing of the share buyback.

-- Written by Ted Reed in Charlotte, N.C.

>To contact the writer of this article, click here: Ted Reed

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,916.03 -69.58 -0.41%
S&P 500 1,965.32 -7.51 -0.38%
NASDAQ 4,398.00 -21.0340 -0.48%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto
Advertising Partners

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs