The Detroit-based automakers stock [NYSE: GM] was trading for as high as $27.70 a share Wednesday morning, up more than $2 from its Tuesday closing price. Shares were up to nearly $28 before the opening bell.Watch video
DETROIT, MI- In wake of the U.S. Treasury Department announcing its planned exit of General Motors Co., the automaker’s stock surged to more than a 52-week high in early morning trading.
The Detroit-based automakers stock [NYSE: GM] was trading for as high as $27.70 a share Wednesday morning, up more than $2 from its Tuesday closing price. Shares were up to nearly $28 before the opening bell.
The stock dipped around 10 a.m. to $26.90, but as of 11 a.m. has since moved on an upward trajectory to about $27.50.
GM earlier today announced plans to purchase 200 million shares of common stock held by the U.S. Treasury for $5.5 billion.
The repurchase price of $27.50 per share represents a 7.9 percent, or about $2, premium over the stock's Tuesday closing price. The share buyback is expected to close by the end of the year, according to officials.
GM made the announcement as part of the U.S. Treasury’s plan to fully exit GM within 12 to 15 months.
After the repurchase, the U.S. Treasury will continue to own approximately 300 million shares of GM stock, or approximately 19 percent of the automaker.
A look at GM's stock price [NYSE: GM] as of 11:18 a.m. Dec. 19.GM will record a $400 million charge on its balance sheet in the fourth quarter.The U.S. Treasury intends to begin its final selling of its remaining shares as soon as January 2013, according to officials. The U.S. Treasury said the "manner, amount, and timing of the sales under the plan are dependent upon a number of factors."
The government’s exit after three years of owning upwards of 60 percent of the company as part of the 2008-2009 auto bailout could help GM shed its “Government Motors” persona.
Since the $85 billion auto bailout, which forced GM and Chrysler into a government-backed bankruptcy, officials have speculated that the government’s ownership crippled the reputations of the companies.
The Obama administration is poised to lose billions of taxpayers' money with the announced exit strategy. In August, it was reported to recoup all of its nearly $50 billion from GM, the U.S. Treasury would have to sell the remaining shares at about $53 per share.
The auto bailout began under President George W. Bush in 2008 and which was expanded by President Barack Obama in 2009.
Since offering a record IPO in November 2010, GM's stock price has fallen from about $33-a-share to under $19 earlier this year.
At the company’s shareholder meeting earlier this year, chairman and CEO Dan Akerson said GM’s stock is a long-term investment.
“Stocks in large measure are based on future expectations,” he told reporters June 12. “Although I think we are doing a lot of good things for the long haul, sometimes the short-term picture is clouded by failures in the market place -- a bad launch would be an example -- or macroeconomic drivers that are sometimes outside the control of the company.”
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