General Motors Co. plans to raise as much as $10.6 billion in an initial public offering that will reduce the U.S. and Canadian governments’ stakes in the largest U.S. automaker, said two people familiar with the plan.
GM, 61 percent owned by the U.S. Treasury Department, will offer 365 million shares at $26 to $29 each, according to the people, who asked not to be identified because the plans are private. The automaker will also offer $2 billion to $3 billion of preferred shares that later will become common stock, said the people.
Chief Executive Officer Dan Akerson is working toward returning the $50 billion GM received in a taxpayer bailout last year. The Treasury, seeking to win higher prices in future offerings, is selling less than the $12 billion to $16 billion that people familiar with the situation said Detroit-based GM and its investment banks had considered earlier.
“This makes sense,” George Magliano, a senior economist for IHS Automotive who is based in New York, said. “They need to protect the price of the offering. The IPO was never intended to buy out all of the government and union stakes in one fell swoop. It’s got to be done over time, and you need to get the right price.”
The U.S. Treasury will likely sell about $7 billion of stock, one of the people said. About $2 billion of shares will be sold by the United Auto Workers retiree health-care trust, and less than $1 billion may be sold by Canada, the person said.
The medical trust’s sale would be worth about 25 percent of its stake, while Canada will sell about 20 percent of its shares, one of the people said.
Roadshow Plan
The offering may price on Nov. 17 and the shares would begin trading the following day, the person said. A roadshow in which GM will pitch investors in North America and Europe will begin Nov. 3 or Nov. 4, the person said.
Noreen Pratscher, a spokeswoman for GM, didn’t immediately respond to a telephone message seeking comment.
“It’s all up to the company,” said Steven Adamske, a spokesman for the Treasury department.
Reuters reported the size of the offering earlier.
As many as five sovereign wealth funds are likely to purchase as much as $2 billion of stock in the offering, one of the people said. Investment bankers for GM met with the funds and private investors in the Middle East and Asia to gauge interest in the offering, two people familiar with the meetings said last month.
Akerson Takes Over
Akerson, 62, took over as CEO from Ed Whitacre in September and will succeed him as chairman at the end of the year. The former Carlyle Group managing director has said he wants to improve quality and accelerate decision-making at the world’s second-largest automaker.
“I don’t think any investor group has infinite patience, and I’m sure that the taxpayers of America would like to see a return on their investment,” Akerson told reporters on Sept. 16. “That’s one of the goals that we have.”
GM reported second-quarter net income of $1.54 billion on Aug. 12 and had a profit of $1.07 billion in the first three months of the year. Revenue in the second quarter increased 44 percent from a year earlier to $33.2 billion on rising sales of the Buick Excelle sedan in China and Chevrolet Equinox sport- utility vehicle in the U.S.
The Treasury Department has retained the right to determine how much of the government’s holding will be included in the initial sale. Potential investors are being sought “across multiple geographies, and the offering has prioritized that so- called retail investors have opportunity to participate,” according to regulatory filings.
