General Motors Corp. plans to raise up to $ 12 billion in the second-largest U.S. IPO in the register after increasing the selling price by 14 percent, according to a regulatory filing today.
GM, 61 percent owned by the U.S. Treasury, is now selling 365,000,000 shares at $ 32 to $ 33 each, the filing today with the Securities and Exchange Commission, said. IPO several times oversubscribed in the original range of $ 26 to $ 29 each, according to two people familiar with the deal. GM also plans to underwriters exercise an option to purchase 54.8 million more shares, the people said.
The IPO, scheduled for tomorrow, will help CEO Dan Akerson return some 49.5 billion U.S. dollars in GM received taxpayer bailout last year. The Treasury Department, which is leading to a loss in its portion of the sale, point of balance if the shares to rise at least 50 percent. A $ 33 each, the sale would give Detroit-based automaker a market value of nearly $ 50 billion, compared with Ford Motor Co. 's 57.8 billion U.S. dollars.
"There is more demand for the shares they are offering," said Josef Schuster, founder of Chicago iPox Capital Management LLC, which oversees $ 3 billion. "They've done a very good job in marketing the IPO."
Visa IPO
The IPO would be the second largest in U.S. history, after San Francisco, Visa Inc. 's 19.7 billion U.S. dollars in sales in March 2008, and comes 16 months after GM left bankruptcy. The largest U.S. automaker also increased to a preferred stock offering at $ 4 million today, $ 1 billion more than planned.
GM is selling shares after Standard & Poor's 500 rose to a maximum of two years this month on speculation the U.S. economy will not slip back into recession. The benchmark for U.S. equities fell for a fourth day today, the longest losing streak since August, even after U.S. production Factory in October increased by more than three months.
Shares of Ford, the U.S. automaker second, up to $ 17 a night, its highest close since January 8, 2004, before falling 2.2 percent to $ 16.62 at 1:09 pm today in the market for New York Stock Exchange .
"Detroit automakers are finally right-sized and smart," said Frank Ingarra, co-portfolio manager at Novato, California, Hennessy Advisors Inc., which oversees 900 million U.S. dollars including Ford shares. "Finally I have a hard driving, well not to find better ways of doing things."
Results earnings
GM reported a third quarter net profit of 2.16 billion U.S. dollars last week, bringing his earnings this year to 4.77 billion. That topped the 4.46 billion U.S. dollars profit for Toyota City, Japan-based Toyota Motor Corp.
The demand for the IPO has been so strong that GM and the Treasury discussed whether the sale of shares above the current over-allotment option, four people familiar with the offer, he said. He declined to be identified because the talks are private.
GM is trying to sell as many shares as possible to reduce the participation of government and the banks of the automaker wants a higher bid to increase the fees they will win, "said Maryann Keller, founder of a consulting firm in Stamford self-appointed , Connecticut. The Treasury prefers to sell fewer shares at higher prices making it easier to recover their investment, he said.
Breakeven price
The Treasury does not sell GM shares at an average of 43.67 dollars each to pay the cost of its total investment, That means that the shares would have to rise to nearly $ 50 for remaining stake of the government to compensate their loss in the IPO, according to the data.
A $ 33 per share, GM is valued at 7.8 times earnings this year, based on its net income in the first nine months of 2010. Dearborn, Michigan-based Ford operations in estimates of analysts to 8.2 times the 2010 earnings, the data show.
While GM will have positive earnings before interest and taxes in the fourth quarter, which will be "significantly lower" than the first three quarters, Akerson said in a conference call on November 10. Ford said in a press conference Oct. 26 that fourth-quarter earnings will be "lower in comparison to the latest quarterly results."
"We are investing in the fourth quarter and with better results in 2011 and 2012," said David Whiston, an analyst with Chicago-based Morningstar Inc., yesterday in a telephone interview. "Not having money to make money. You have to invest to get the product out the door, and is a very capital intensive industry."
Relative Value
GM, which lost 82 billion U.S. dollars from 2005 to 2008, was valued at an average of 10.3 times earnings from 2000 to 2004, monthly. Ford traded at an average of 13 times earnings in the same period.
General Motors Corp. sought bankruptcy protection under Chapter 11 on June 1, 2009, after the failure of New York, Lehman Brothers Holdings Inc. in September 2008, froze credit markets and helped make the longest recession since the Great Depression.
Without the exercise of the over-allotment, the IPO would reduce the Treasury's share to 43 percent, according to reports of GM. If the option is used, the game would drop to 41 percent.
The IPO can reduce the share of the trust for UAW retiree health care to 15.3 percent from 19.9 percent, and the Canadian government could reduce its stake to 9.6 percent from 11.7 percent According to the SEC.
GM insurers may stop taking orders for shares at 4 pm New York time today, according to a person familiar with the IPO.
Kuwait, SAIC
The Kuwait Investment Authority may buy a stake of 1 percent or less, a person familiar with the deal said yesterday. Shanghai-based SAIC Motor Corp., GM's partner in China, will probably be one of the buyers, three people familiar with the plans said last week.
Morgan Stanley, JPMorgan Chase & Co., Bank of America Corp. and Citigroup Inc. is a leader in initial public offering that includes 35 underwriters, presentations, he said. Barclays Plc, Credit Suisse Group AG, Deutsche Bank AG, Goldman Sachs Group Inc. and Royal Bank of Canada are also included in the prospectus.
GM's common stock is traded on the New York Stock Exchange under the symbol of GM and the Toronto Stock Exchange under the symbol GMM, the filing with the SEC showed.
0 comments:
Post a Comment