The plan will see the American car-making giant purchase the stock from the US Department of Treasury for US$5.5 billion ($5.3 billion), or US$27.50 ($26.25) per share. The stock buyback is associated with the Department of Treasury’s own plan, announced concurrently, to sell off its total 500 million shares of GM stock within the next 12 to 15 months.
According to a release from GM, Treasury intends to begin its disposition of its remaining shares into the market through “various means and in an orderly fashion”, as soon as January 2013.
GM chairman and CEO Dan Akerson said the announcement was an important step in bringing closure to what has been a successful rescue of the auto industry.
“It further removes the perception of government ownership of GM among customers, and it demonstrates confidence in GM’s progress and our future," Akerson said.
“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.”
GM says the stock repurchase will go ahead with Treasury agreeing to relinquish certain governance rights that were included in the department’s Secured Credit Agreement with the car maker.
Until sold on, Treasury will still own approximately 300 million shares of GM stock, or approximately 19 per cent of the outstanding shares on a fully diluted basis.
The US government took ownership of the GM stake as part of the auto industry rescue package initiated in 2008 by President George W. Bush and expanded on in 2009 by President Barack Obama.