General Motors Co. 's initial public offering could raise 15.8 billion U.S. dollars after the U.S. Treasury and the United Auto Workers' trust in health care for retirees has increased the shares being sold, according to a regulatory filing.
The initial public offering was expanded by 31 percent to 478 million shares, GM said in a filing with the Securities and Exchange Commission, a day after increasing the offer price up to $ 33 per share. An over-allotment and a preferred stock offering may increase the total amount raised nearly $ 22,700,000,000. Agricultural Bank of China Ltd. 's $ 22,100,000,000 initial sale is the largest initial public offering of common stock-in history.
The initial sale, scheduled for today will bring CEO Dan Akerson near his goal of returning the 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 only if the shares rise at least 60 percent, Bloomberg data shows.
"Finance is the demand for insurance is that for these actions to get wet," said Michael Yoshikami, which oversees $ 1,000,000,000 in YCMNet Advisors in Walnut Creek, California. "It makes sense for them to do this because we are talking about leaving shares at a price that is far above what you think everyone would be in demand."
The offer would be the IPO of common values, the second largest in U.S. history, after Visa Inc. 's 19.7 billion U.S. dollars in sales in March 2008, Bloomberg data shows. With the over-allotment option or call greenshoe, GM could sell nearly 550 million common shares and raise about 18.1 billion U.S. dollars.
Offering oversubscribed
Noreen Pratscher, a GM spokesman, and Eric Henry, chief investment officer of the UAW trust, did not return phone messages seeking comment yesterday. A Treasury spokesman Mark Paustenbach, declined comment.
GM insurers stopped taking orders for the IPO yesterday, which was more than seven times oversubscribed, according to a person familiar with the operation.
"Even with the high demand, can not go too high in terms of price, and that is why we are offering more shares," said Alan Baum, director of Baum & Associates, a market research firm in West Bloomfield car, Michigan.
While the IPO has not been priced yet the stock is likely to be sold for about $ 33, said a person familiar with the plans who asked not to be identified because the talks are private.
Larger deals
The Treasury will provide measures about 95 million more than originally planned, and the UAW trust sold 18 million more, shows today's presentation. The over-allotment option will increase by an additional 14,300,000 shares issued by the Treasury and 2.7 million by the trust of the UAW.
The offer would be the lowest bid of the Treasury at 37 percent, or 33 percent over-allotment option, 61 percent, the filing shows. The UAW trust investment would drop to 14 percent, or 13 percent to 20 percent option.
The Treasury does not sell GM shares for an average of $ 43.67 per share to break even on its total investment, according to data compiled by Bloomberg.
"We just get our money back if they are very patient and if GM performs very well," said Joe Phillippi, director of AutoTrends Consulting Inc. in Short Hills, New Jersey. "GM really has to hit the ball out of the park over the next two years."
Compare Ford
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, Ford Motor Co. in the trades 8 times analysts' estimates for 2010 earnings, the data show. Ford has been most profitable automaker in the world this year through September.
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 data compiled by Bloomberg. Ford traded at an average of 13 times earnings in the same period.
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. 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.
The automaker 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 yesterday, the worst losing streak since August.
Foreign investors
The Kuwait Investment Authority may buy a stake in GM for 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 subscribers, according to a GM with the Securities and Exchange Commission. Barclays Plc, Credit Suisse Group AG, Deutsche Bank AG, Goldman Sachs Group Inc. and Royal Bank of Canada are also included in the prospectus.
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.
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.
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