A Report from General Motors this morning states that this week's initial public offering (IPO) of the newly reformulated company will be approximately 14% higher than planned. Previsouly, GM stated that common shares would be sold to investors between $26 and $29 per share and 60 million preferred shares would be sold at $50 per share. The new report indicates that the new price offered to investors will be between $33 and $34 per share with approximately 365 million shares outstanding, and the number and price of preferred shares will increase to 80 million and $60 respectively.
If completely subscribed, these values give General Motors and IPO value of approximately $16 billion. This would make General Motors the second largest IPO in history. GM offered no official explanation for the change, but market insiders opine that heavy demand is the leading cause.
The increase in valuation will decrease the US Treasury department's stake from 43% to 41%. The US Treasury got involved last year after GM filed bankruptcy on June 1, 2009. Many were critical that the United States government took a stakeholding in the company in exchange for a bailout of the ailing company. In order to break even on the bailout, the Treasury will need to sell its shares for an average price of $43.67. This would require a 32% rise in share price after GM's IPO debut.
GM will be trading under the ticker symbol "GM."