Just how much will General Motors make from its initial public offering, which is due later this month? According to new reports, which cite information from sources close to the matter, the automaker is expected to price each share between $26 and $29.
Although the automaker is barred from discussing details of the IPO by securities regulation, the Detroit Free Press reports that GM is widely expected to file a final registration for the stock by Wednesday, November 3, at the very latest. This registration will indicate what GM expects to price each share at during the IPO, although that figure isn't likely to be publicly revealed until November 17 - a day before GM's anticipated return to the New York Stock Exchange.
Those figures are substantially higher than the $20-25 estimate given by GM chairman Ed Whitacre earlier this year. Interestingly, the Associated Press notes those prices are expected to value the company at roughly $46 billion, which is on par with Ford's market value.
GM isn't expected to profit from the IPO, which consists of 365 million common shares. The United States Treasury is expected to sell some of its 304 million shares in the company, which could reduce the government's stake in the automaker from 60.8 percent to 43. Both the Canadian government and the United Auto Workers are expected to sell some of their stake in the company; reports suggest both parties will cut their ownership of GM by roughly 2 percent.
GM is also expected to use the IPO to issue preferred shares, which act in a similar fashion to bonds, and will convert into common stock shares in 2013. According to the Associated Press, all earnings from the preferred stock sale will go directly towards funding pension payments and repaying outstanding loans.
In the coming days, GM CFO Chris Liddell and vice chairman Steve Grisky are expected to embark on a road show of sorts, in the hopes of drumming up interest from the offering. GM's main targets for the IPO are firms managing hedge funds, pensions, or mutual funds, but it's almost certain that they'll attract a lot of attention from outside of the United States. Reports suggest some $2 billion of the IPO will come from investors in Asia, Europe, and the Middle East.