DOW JONES NEWSWIRES
General Motors Co. on Wednesday filed plans to launch an initial
public offering, which sources expect could raise $10 billion or
more, as the U.S. auto maker prepares to return to the public
market after an absence of more than 14 months.
And while the deal would be the largest this year, it will
likely fall short of the largest IPO in U.S. history. That
distinction goes to Visa Inc. (V), which raised $17.9 billion in
2008.
GM said it won't sell any common stock--only current owners
will--though it will sell a to-be-determined amount of preferred
stock. No dividend is planned initially for the common stock, of
which 500 million shares are slated to be outstanding after the
IPO.
Current holders are led by the U.S. Department of Treasury,
which has a 61% stake.
According to GM's filing with the Securities and Exchange
Commission, it intends to apply to list the common stock on the New
York Stock Exchange under the symbol GM and also to list shares on
the Toronto Stock Exchange under a ticker to be determined.
The move will allow the U.S. government to begin off-loading the
stake it acquired through last year's rescue of the auto industry.
GM has been eager to cut ties with the U.S. government as soon as
possible, with Chairman and Chief Executive Edward E. Whitacre Jr.
saying the relationship--which led critics to dub GM as "Government
Motors"--is a turnoff to potential customers.
On Thursday, GM reported a $1.3 billion second-quarter profit, a
stark contrast to a year ago when the company lost nearly $13
billion and filed for bankruptcy. The company is capitalizing on a
leaner cost-structure and now has fewer brands, employees and
factories, and a fraction of the debt it once held.
Through July of this year, GM's U.S. sales are up 14% from last
year's moribund level, with results fueled mostly by a strong
rebound in sales of crossover vehicles and full-sized pickups.
Demand for those vehicles suffered last year due to the recession
and high fuel prices. In each month of this year, GM has reported
higher sales of truck and sports-utility vehicles from year-ago
levels, while car sales rose in the first five months of the
year.
In GM's SEC filing, the company warned that, while the recovery
has continued through the end of June, "there is no assurance that
this recovery in vehicle sales will continue or spread across all
our markets." GM said its ability to achieve long-term
profitability depends on the company's ability to entice customers
to consider its products when purchasing a new vehicle.
GM said its market-share losses over the past three years can be
attributed to brand perception. To address that, GM said it was
moving to increase the fuel efficiency of its vehicles, which it
said will be critical to long-term profitability.
GM has made a number of notable announcements in recent weeks,
including its bid to acquire auto-finance company AmeriCredit Corp.
(ACF) in a $3.5 billion acquisition aimed at increasing
availability of auto loans and leases. GM also announced a $41,000
starting price for the battery-powered Chevrolet Volt, as GM works
to cultivate a "green" image.
Meanwhile, Whitacre on Thursday said he will step down Sept. 1
as CEO and, by the end of the year, as chairman, naming board
member Daniel Akerson as his successor. The move answered the
biggest question surrounding the future of the company, as Whitacre
hadn't intended a long tenure at the helm of GM.
The SEC typically takes 30 to 90 days to review an IPO
registration filing. For the government to recoup its investment,
GM must achieve a stock-market value of $70 billion--10 times GM's
market capitalization before the company headed into
bankruptcy-court protection, and at least $30 billion more than the
market value of Ford Motor Co. (F).
-By John Kell, Dow Jones Newswires; 212-416-2480;
john.kell@dowjones.com
(Sharon Terlep and Lynn Cowan contributed to this article.)