General Motors has announced that it will increase its initial public offering of common stock from $32 to $33 per share. This is a result of increased demand for GM stock because it has had significant profits after the 2009 bankruptcy bailout. The government’s bailout money, which has caused it to own approximately 61% of GM, will now be lessened after this generates $8.6 billion of revenue. After the IPO, the government will own only 35% of GM.
At the beginning of the month, GM claimed that it would issue 365 million shares of IPO stock. However, the strong demand from investors has increased the amount of shares offered by another 54.8 million according to the banks. The U.S. government wants to add another 84 million shares to this. Steven Rattner, the Obama administration’s leader for the bailout of the U.S. auto industry said, “Investors who have long shunned automotive stocks are giving the sector a fresh look as GM, Ford Motor Co., and Chrysler LLC deliver impressive financial results” (The Wall Street Journal). This has led SAIC Motor Corp., China’s largest auto maker, to buy approximately $500 million of GM stock.
During a continuing economic crisis, the Big Three have performed very well. All of their financial reports have amounted to astonishing numbers. This has increased their rankings as top investment choices. The Big Three have sought new production methods, have new management, and are producing innovative cars to remain competitive. These practices will continue because of GM’s obligation to pay back the funds that the government bailed them out with, and to assure that they remain in good stead. As we have seen, these automakers employ many Americans and have a huge effect on the economy.
Source: http://online.wsj.com/article/SB10001424052748703326204575616633069634188.html?mod=WSJ_auto_IndustryCollection
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