GM IPO Unlikely to Repay Government Bailout

GMRenaissanceCenter06 GM plans to file an initial public offering tentatively scheduled for Nov. 18, according to The Associated Press. In that filing, GM is expected to sell 365 million common shares of stock for a share price quoted around $26 to $29, according to analysts.

That sort of sale would allow GM to raise around $10 billion and give the company a market capitalization of about $46 billion; Ford is currently valued at about $49 billion. While that sounds like a healthy market cap, it would have to nearly double in order for the government to recoup all the money it put into GM. For instance, if the if the IPO price settles at around the $50 billion level, the government would lose about 38% on the first batch of shares it sells, according to the Wall Street Journal.

Overall, the U.S. government owns 304 million shares of GM stock, which was bought for more than $40 billion. Combine the Canadian government shares, and government ownership represents more than 500 million shares, and nearly 73% ownership of GM.

Today, GM is set to file its final registration statement, which will set a final target stock price, after a 3-1 or 4-1 split, according to the Detroit Free Press. We’ll keep you posted once a final statement is made.

GM IPO Pricing: Getting Bailout Money Back Unlikely (USA Today)

By Colin Bird | November 2, 2010 | Comments (4)

Comments 

DCT

This article further reinforces why we're glad we bought our Honda over the Chevy Equinox. We'll never again consider buying a General Motors vehicle. They should be ashamed of themselves ripping off the American tax-payer like that. I'll definitely shop Ford but not GM.

Eurothinker

We are lucky we have GM and Chrysler just getting the money to keep jobs... in Europe VW are experts in threatening the governments into giving them money every now and them, or they close the factory (they have done it successfully in Spain, Germany and in the Czech Republic).

Troy S.

Sheth,

Does this article support your theory of sustained GM profits or my theory of our grand children and their grand children paying for the bailouts for years to come?

Troy S.

I read today that GM will also enjoy a 45 Billion tax break on it's debt. It's nice that the debt will go "poof" from GM's debt but that money will be on the shoulders of American taxpayers for years to come. Can someone please make my debt go "poof" too?

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