General Motors to File for IPO 'As Soon As Possible'

General Motors wouldn't specify when an IPO is coming, but says it wants to sell shares Eager to get out from under government control, GM expects to sell its stock in one swoop when it offers shares to the public sometime later this year, its CEO said Thursday.

Some experts had expected General Motors to sell only a partial stake at first, followed by several smaller sales, but Ed Whitacre told reporters at an auto conference Thursday, "Our anticipation is we'd roll it out there all at once."

Ever since the Obama administration gave the automaker a $50 billion dollar survival loan last year, many drivers have scorned the company and bought cars from rivals. Even though GM has cut costs, changed leadership, and reported its first quarterly profit since 2007, the resentment will linger as long as taxpayers have a 61% stake in the company.

"We want the government out. Period," Whitacre said. "We don't want to be known as Government Motors."

Offering Coming 'As Soon As Possible'

Although Whitacre wouldn't say when GM wants to sell the stock or when it would file paperwork with regulators to start the official process, he repeatedly said GM wants the sale as soon as possible. The paperwork, he said, would be submitted in the near future.

GM spokesmen later said the decision on how much equity to sell will be made by current stockholders, the U.S. and Canadian governments, a United Auto Workers health care trust and former bondholders.

Whitacre said the company could have a successful IPO sometime after GM reports second-quarter earnings next week. The earnings numbers, he said, would be impressive. GM's business already looks healthier. It reported a net income of $865 million in the first quarter.

"You'd have to say our future is pretty bright," Whitacre said.

The Largest IPO in U.S. History?

A General Motors IPO could be the largest such sale in U.S. history, Whitacre said, and demand for the shares should be good whenever they are sold.

It could be worth more than $70 billion - enough to pay back its government aid -and far bigger than a 2008 offering by Visa (V) that netted nearly $18 billion, experts said.

Still, there are risks in doing a one-shot IPO.

The shares would sell for less if placed on the market in one large batch, experts said. Normally, larger companies sell a portion of their shares first, then further establish their earnings and management history as they offer the rest, said Linda Killian, portfolio manager of the initial public offering fund at Renaissance Capital in Greenwich, Conn.

Also, the climate for IPOs is poor, said Scott Sweet, senior managing partner of IPO Boutique in Tampa, Fla., which advises investors on IPOs.

Adviser Recommends Patience

Sweet said he would advise GM to wait until next year when unemployment is expected to drop, housing picks up and the government could have a plan to deal with its massive debt.

"I know some of the best deals in the pipelines have been held up," Sweet said. "They don't want to take a fraction of what they could get in a better market."

Sweet said GM may be pushing ahead for political reasons, so President Obama and Democratic congressional candidates can tout a successful IPO in their campaigns ahead of November elections.

Democrats could use a successful stock offering as proof that the billions in federal aid saved and created jobs, and the government was repaid. Obama appeared at two Detroit factories last week and in Chicago Thursday to tout the success of the unpopular auto industry bailout.

No Political Pressure, CEO Says

But Whitacre denied that GM is under pressure from the Obama administration to sell shares before the elections.

"We're trying to not tie it to any elections or anything like that, truly," Whitacre said. "We just want it to be right."

Last week, United Auto Workers President Bob King said that GM will file the IPO paperwork in mid-August. The union later said King was basing his statement on media accounts.

Whitacre also said Thursday that the automaker is looking to start up an idled factory to meet higher demand for its products, but he gave no specifics. The company has placed on "standby" two closed factories in Spring Hill, Tenn., and Janesville, Wis.

GM, he said, will have a U.S. dealership network of around 4,500, about 25% smaller than it was in early 2009 before the company entered bankruptcy protection.


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Tom and Sherry

We think there is actually 'three bubbles in the US today, There is the WALL STREET BUBBLE, then there is THE MANHATTAN BUBBLE, and then there is THE BELT-LINE BUBBLE. These entities are completely out-of-touch with reality. They talk about raising taxes, they talk about not funding un-employment compensation.."forgetting that had it not been for the WALL STREET BUBBLE" there would not be a FINANCIAL BUBBLE, (READ THE BOOK..END THE FED...by Ron Paul to understand why, why, we the people will always have to bear the brunt of
wall streets stupidity, while at the same time not be allowed to participate in "the rewards" The other bubble as we all know is the area around Washington DC
where the people with all the political jobs live and work for the FEDERAL GOVERNMENT, get paid about 30...40% more than (us ) the american taxpayer, and this list of abuse goes on and on...here is a "good-one" for all of you out there and unemployed hear this...a congressman who leaves the congress, " ie. voted-out, or retires etc., upon leaving congress gets his full compensation, and ....
the (good insurence) for his/her life...!!! Talk about unsustatinble pensions.
I think we could fix our countrys problems by term limiting congressmen/senators to three terms, and go after every abuse by those who we elected, every one of them and get rid of all government waste and we can run this country quite well on the monies taken in in the form of taxes. The monies in the social security coffers has been like a piggy bank to decades of members of congress/and senate, they have stolen from our money and if they had not done this there would have been no shortage if not for the stealing by both parties and they can pay us back (their national committees can write matching checks on installment and all members can take a bi-annual set of questions to make sure they "do no harm" which means no more cheating stealing or pay-off deals. We can fix the problem now
Tom and Sherry

August 06 2010 at 4:53 PM Report abuse rate up rate down Reply
Bruce

jaluty - GM didn't coin the phrase "Gubment Motors", they are just working to eliminate the percepotion, as any smart marketing company in their posiiton would. They make and sell cars. Anything that is detrimental to their marketing is something to avoid. Not looking to get ina philisophical debate over the bail out, or even why it became necessary, just pointing out the facts. GM's intent is to get away any government involvement/ oversight in their day to day business. Not surprisingly, Lee Iaccoca himself advised this same course of action at the very beginning, and he would likely know a thing or two about that.

August 06 2010 at 11:35 AM Report abuse rate up rate down Reply
David Hays

How can Mr. Whitacre consider an IPO in this economic environment. He also wants to put it out in one massive offering. Neither of these moves maximizes returns for the company and therefore the potential to pay back the US government. What is the hurry for the IPO? I also question GM giving any contributions to any organization (political or nonpolitical) until it is out of debt. Maybe GM management hasn't improved so much after all.

disclaimer: I was a GM bond holder that was assured that my investment was secured then the rules were changed. I have owned GM vehicles for 33 years but my next vehicle won't be a GM or Chrysler. I won't be investing in GM because I don't see that much has changed. I have in the past and recently (this week) invested in Ford bonds.

August 06 2010 at 11:34 AM Report abuse rate up rate down Reply
dalea158

The UAW gave up many many concessions. Union gave up dental and vision car, got health care off GM's back (which is saving GM billions) new employees starting rate $14.00 Hr. Least the uaw were willing to take cuts and help drive down GM's costs.

August 06 2010 at 11:18 AM Report abuse -1 rate up rate down Reply
1 reply to dalea158's comment
dalea158

digit93...interesting only the toyota csr drivers had the so-called driver error, you really believe that?

August 06 2010 at 11:00 AM Report abuse +3 rate up rate down Reply
obijwan

Sounds like K-Mart

August 06 2010 at 10:57 AM Report abuse -2 rate up rate down Reply
jaluty

So he doesn't want to be known as "Government Motors", gee seems they loved the government when they got the damn bailout. Now all of a sudden it's a bad image for them. That jerk needs to learn some class and gratitude. Because if the government had listened to the people, their butts would be unemployed. What an ungrateful ass! Buy American and this is the gratefulness from their employees. I'll go buy a Toyota!

August 06 2010 at 10:51 AM Report abuse -1 rate up rate down Reply
erhn73614

The whole point of the GM and Chrysler bailouts were to make sure that the government wasn't left on the hook for pension and retirement cost which is what would have happened in a normal bankruptcy. The current situation has left the unions in place and provides this money from the IPO which will be controlled by- I think the Democrats in Washington- who will treat this money like they found it laying on the sidewalk and direct it into places which will help assure their reelection and not to reduce the deficit like it should be. It is the 'business' of politics! What a wonderful alliance.

August 06 2010 at 10:47 AM Report abuse +1 rate up rate down Reply
1 reply to erhn73614's comment
jaluty

BS government doesn't have to cover any of that if they went under. There is no law that requires them to.

August 06 2010 at 10:53 AM Report abuse +2 rate up rate down Reply
digit93

to mcarlo- an IPO is an Initial Public Offering, wherein folks can purchase shares of the company.
To Bill,
When and where did GM hire 7000 people? They've been closing factories and dealerships over the last year and a half...I don't see where they've hired anyone. But I'm glad that you brought up Toyota. Now THERE'S a car company to emulate! They have no safety or quality issues...just a media issue. I've often wondered what precisely is behind that particular witch hunt and I've come to believe that with the government bailout of US automakers and with the UAW support during the elections, this government orchestrated an assault against Toyota that continues to this day....for the purpose of shoring up the sales of domestic models. Congressional hearings with no testimony from the engineers or mechanics? Bringing in NASA to investigate their electrical systems? Big news! Buried in the back pages however, were the results of those investigations- no problems found! "Driver error" being the most frequent conclusion. Thank goodness the millions of toyota owners out there asked themselves, "have I ever had a problem?" Overwhelmingly, the answer was no.

August 06 2010 at 10:23 AM Report abuse rate up rate down Reply
1 reply to digit93's comment
carysaturn

Just read Edmunds.com reviews of a current or late model Camry and see exactly what owners have to say. After that, read what the owners have to say about an 08 or 09 Saturn Aura. Best car GM has ever built and the Government put them out of business...go figure.

August 06 2010 at 11:08 AM Report abuse -1 rate up rate down Reply
gagesxm

LIPSTICK ON A PIG...AS LONG AS UNIONS ARE INVOLVED THIS COMPANY HAS NO CHANCE OF SURVIVAL...THE MORE YOU MAKE THE MOR THEY DEMAND...THEN COMES THE DOWNTURN AND NO CONSESSIONS...AND BACK IN THE GRAVE THEY GO

August 06 2010 at 10:18 AM Report abuse +6 rate up rate down Reply
2 replies to gagesxm's comment
ddomine

Some union workers may be willing to take cuts, but most won't. They bleed the company for every cent they can get. Unions are breaking American companies. Get rid of them! Go GM! I will continue to buy Chevrolets, they are great vehicles. Well made, dependable, reasonably priced and economical to own if you do the proper maintenance. Some people complain of poor quality, bs, most people don't take care of their vehicle, then they complain.

August 06 2010 at 11:06 AM Report abuse +1 rate up rate down Reply
dansamga

The image of the unions is quite accurate. The union "fights" for jobs that aren't necessary, then you can walk down the line and see that a 4 man station is manned by 2-3 workers while the others sleep half their shift away. They then change places at lunch. Someone considered starting pay of $14 reasonable? Where else in this country can someone with only a high school diploma or GED get paid $14 to start work? Who was the last person hired at this rate? Seems more positions have disappeared to me. Then there is the job bank scam. Sit and get paid for nothing, what a bargain. Unions had their place in the nation's history but they gopt greedy and have tobe put in their place. MAnaegement is just as guilty of stupidity. Japanese car makers have been taking market share from the "big 3" since 1980. A simple look at the charts & graphs would tell any moron that but did they adjust? NO WAY! They just put out a bunch of marginal products and yell "buy American". Give me a reason to and maybe I would! Why should I pay the over inflated prices of union labor that goes into a US made car? To support my neighbor? Why should he be paid $28 an hour to put a bumper on a car as it passes down the line? Workers are not paid that in other parts of the world because the labor cost is not justified and customers will not pay the over inflated price it results in. GM was once the largest corporation in the world and they have been surpassed by the likes of Walmart. What does that tell you? When the unions want to get real about their rates of pay and forego the things like job banks and other BS benefits thay have forced through labor negotiations, I will consider buying another US made car. I have owned nothing but US made cars for the 30 years I have been driving but that is about to change if these unions and the management of these companies doesn't get real about putting out a good product at a reasonable price.

August 06 2010 at 11:57 AM Report abuse rate up rate down Reply