General Motors Co. will purchase $5.5 billion of its stock from the U.S. Treasury, moving the government a step closer to ending a controversial 2009 bailout of the auto industry.
GM will buy 200 million shares for $27.50 each, a 7.9 percent premium over Tuesday’s closing price, the automaker said Wednesday.
Treasury will still hold about 300 million shares, or 19 percent on a fully diluted basis, after the transaction and plans to sell its entire holding within 15 months, GM said.
The deal for 13 percent of the automaker’s stock helps the Obama administration recoup part of the $49.5 billion invested in GM.
Cutting the stake could be good for GM’s image and its stock.
“It’s going to materially lift an overhang that’s been over the stock,” Peter Nesvold, a Jefferies & Co. analyst, said. “There’s been this nagging fear anytime the stock gets closer to $27 or $28 where the chatter about the government sell down picks up again.”
GM closed Wednesday up $1.69 to $27.18. Shares have gained 34 percent this year. The company’s initial public offering price was $33 a share. The U.S. needed to sell its shares for more than $50 each to break even on the GM bailout.
Treasury said it plans to begin selling its remaining shares as soon as January. The sale represents 40 percent of the government’s remaining stake.