China's Largest Automaker Weighing GM Stock Purchase

China's largest automaker, SAIC Motor, is considering taking a stake in General Motors when the Detroit-based automaker begins its public offering of stock later this year.

SAIC hasn't yet decided whether to invest in the new GM, although it's weighing such a deal, according to a report Tuesday in The Wall Street Journal, citing unnamed sources familiar with the matter. GM and SAIC have been building cars jointly in China since the 1990s.

Still, an expression of interest by the Chinese automaker could hit a quick dead end if the U.S. government objects to the move, Reuters reported Sunday, citing sources with knowledge that SAIC was looking to take a "single-digit" share in GM.

The U.S. Treasury, which holds a 61% stake in GM, is likely to seek overseas investment as the agency looks to pare down its investment, according to a statement posted on a government website. Retail and institutional investors will be offered shares, Treasury said.

"Critics will publicly blast the Obama administration for using taxpayer money to fund foreign ownership in an American icon," Morningstar auto stock analyst David Whiston told the Journal. Still, Whiston said, restricting overseas investment would be impractical because the shares would be available on the public market.

GM declined to comment on SAIC's possible investment, noting that the company is barred by securities regulation from talking about the IPO.

GM filed papers with U.S. regulators in August to once again become a publicly traded company after succumbing to government-sponsored bankruptcy in June 2009. A new, smaller GM emerged a month later.

Though some Americans will likely object to foreign ownership should SAIC invest in the resurgent automaker, GM's stakeholders -- which also include the Canadian government and United Auto Workers -- will no doubt need all the help they can get in unloading shares. GM has reported just two quarters of profitability in post-bankruptcy form.

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bayconnect

If I had a nickel for everytime someone has posted on Daily Finance, over the last year, that they will never buy another GM product, I would not need to set the alarm clock and go to work tomorrow. China did not ruin our economy. We the people did! We allowed business, executives and Wall Street to profit at the expense of American workers. There are 10 people for every one that posting on Daily Finance (daily) that support that business such allowed to be business. American workers are just a under valued business resource to be used as business executives see fit.

September 21 2010 at 11:02 PM Report abuse rate up rate down Reply
michaelkrigstein

IF CHINA IS PERMITTED TO BUY A STAKE IN GENERAL MOTORS,I WILL NEVER BUY A GM PRODUCT AGAIN. I HAVE BOUGHT NEW VETTES, CADILLACS, CHEVYS ETC ALL MY LIFE. I WILL NEVER, NEVER , NEVER BUY GM AGAIN. CHINA IS A COUNTRY THAT IS OUR ENEMY, IT HAS RUINED OUR ECONOMY WITH MILLIONS OF JOBS LOST TO OUTSOURCING, IT' CURRENCY MAKES IT IMPOSSIBLE TO COMPETE FAIRLY, AND THEY ARE BUILDING THEIR MILITARY AND NUCLEAR CAPABILITIES OFF THE POPULATION OF THE UNITED STATES. WE PERMITTED THE CHINESE TO HOLD A TRILLION DOLLARS OF TREASURY BONDS. SO THEY ALREADY HAVE US BY THE SHORT HAIRS MILITARILY AND ECONOMICALLY. IF THE OBAMA ADMINISTRATION PERMITS THIS, IT WILL BE THE LAST NAIL IN OUR COFFIN. WE MIGHT AS WELL STOP TEACHING ENGLISH IN THE SCHOOLS AND ONLY TEACH CHINESE. FASHION WON'T BE TOO IMPORTANT, WE COULD ALL WEAR GREEN UNIFORMS AS THEY TELL US WHERE TO LIVE AND WHAT WE WILL DO FOR THE MEMORY OF MAO. WE ARE AS THE RUSSIANS ONCE SAID, YOU WILL SELL THE ROPE TO US THAT WE HANG YOU WITH. THE BABY BOOMER GENERATION WILL GO DOWN AS THE WORST GENERATION IN AMERICAN HISTORY. THE UGLY BELLY OF CAPITALISM IS GREED AND IT HAS DESTROYED US.

September 21 2010 at 5:03 PM Report abuse rate up rate down Reply
MSmailbox

GM should be able to garner funds from the many patents, which exist to protect ideas and inventions. When they owned Hughes Aircraft, we incorporated jet-fighter technology into our cars. Heads-up Display was an excellent example of this. I owned a '92 Pontiac Bonneville SSE and it was marvelous! The speedometer, tachometer and related alerts were projected onto the field of vision, for the driver. This, along with thousands of other patents, could be licensed to foreign automotive manufacturers. I realize that many have no doubt been sold as scrap, but where is HUD?

September 21 2010 at 12:46 PM Report abuse rate up rate down Reply
1 reply to MSmailbox's comment
itacurubi

Many of them are undoubtedly already licensed. Perhaps the rest aren't wanted or are thought to provide some competitive advantage. Personally, I don't see the problem with some Chinese ownership. Many American companies have stock in Chinese companies.

September 21 2010 at 12:49 PM Report abuse rate up rate down Reply
itacurubi

Why are conservatives such radicals when it comes to writing English?

September 21 2010 at 12:41 PM Report abuse -3 rate up rate down Reply
highmileage724

This is just another way for china to take control of the US with obammas support. People you should syart looking at the picture of where this is taking us. If you have any feelings about the security of America ,You would see we have to get obama,reis and polosi out of office before they run the whole country down. Bush was a better President than 100 obamas could be.

September 21 2010 at 11:26 AM Report abuse rate up rate down Reply
1 reply to highmileage724's comment
epsaklas

You can't have it both ways. The Pres. is being assailed by the right for bailing out GM. Who do you think would have bought all of GM's assets if the US Govmt. would not have stepped in? Of course, the answer, at least in part, is foreign corporations. Now you want to assail the President because China, in this free market economy, may buy shares of GM. Stop arguing both sides. Think through the issues and maybe you will how wrong you are.

September 21 2010 at 2:52 PM Report abuse rate up rate down Reply
Waz up Daddy?

All this preaching of free trade being good for economies around the globe and the rhetoric that goes with it, has all the gullable but honest and simple folks living in this great country of ours, believing all this hype! Why shouldn't our goverment object to the Chinese trying to buy a piece of GM through their impending IPO? As we all know the Chines among other nations severely restrict imports into their country and yet their goods are flooding ours. This free trade should be a two way street. We should only allow the same precentages of goods into our country as our counterparts allow into theirs, all things being equal.I believe that will allow our country to prosper once again.

September 21 2010 at 11:23 AM Report abuse +3 rate up rate down Reply