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Detroit - The U.S. government plans to sell 40 percent of its General Motors Co. stock by the end of the year and to sell the rest of its shares within 12 to 15 months, officials announced Wednesday.
The government's exit from GM stock will mark the end of its direct involvement in an iconic American company that fell into disrepair and nearly collapsed in 2009 before receiving a $49.5 billion bailout and returning to job growth and profitability.
GM said Wednesday that it would buy back 200 million shares from the U.S. Treasury Department by the end of 2012 in a $5.5 billion deal. That would reduce the government stake from 26 percent to 19 percent.
The U.S. plans to exit its equity stake in GM in the next 12 to 15 months by selling its remaining 300 million shares in the market.
"This announcement is an important step in bringing closure to the successful auto industry rescue, it further removes the perception of government ownership of GM among customers, and it demonstrates confidence in GM's progress and our future," CEO Dan Akerson said in a statement.
GM said it would pay $27.50 per share in the buyback deal, reflecting a 7.9 percent premium over Tuesday's closing price of $25.59. The company will record a $400 million charge on its balance sheet in the fourth quarter.
At that share price, the government will take a loss. The government, which said it would sell the rest of its shares in an "orderly fashion" in the market, needed to sell its 500 million remaining shares at a price of about $53 to break even on the bailout. To avoid a loss now, the government would need to sell its remaining 300 million shares at a price of nearly $70.
The government has said it wanted to balance its desire to get out of the auto business with the desire to recover more funds for taxpayers.
"Overall the automotive industry in the U.S. today is in extraordinarily good shape - the best shape it's been in in decades," GM Chief Financial Officer Daniel Ammann said Wednesday. "General Motors is a big part of that. We've been adding jobs, growing the business, developing great products, doing well in the marketplace and that's fundamentally what we're here to do."