General Motors said on Wednesday it will buy back 200 million of its shares from the U.S. Treasury, which intends to sell the rest of its GM stake over the next 15 months, bringing to an end ownership that led to the nickname “Government Motors.”
Chief Financial Officer Dan Ammann said GM will pay $5.5 billion, or $27.50 a share, for the Treasury stake in a deal expected to close by year-end. That represents a 7.9 percent premium on Tuesday’s closing price.
GM shares rose 8.7 percent to $27.72 in premarket dealings.
Treasury said it will sell its remaining stake of about 300.1 million shares “through various means in an orderly fashion” over the next 12 months to 15 months, and could begin the process as soon as January.
GM received about $50 billion from the U.S. Treasury as part of its 2009 bankruptcy restructuring in 2009 under the Troubled Asset Relief Program (TARP).
The deal will raise the proceeds Treasury has recovered to $28.6 billion. That leaves $20.9 billion left on the original bailout amount, meaning the government would have to sell its remaining shares at an average price of $69.72 to break even.