GM speeds off the grid in its return to NYSE
Friday 19 November 2010
General Motors executives rang the bell of the New York Stock Exchange and revved the engine of a Chevrolet Camaro to signal the flotation of the company's shares yesterday, and the stock duly responded with the equivalent of going from 0 to 60 in the early seconds of trading.
The strong demand in the after-market capped a successful initial public offering of the giant car maker, which has returned $23.1bn in proceeds for US and Canadian taxpayers and unions representing retired and current employees.
By lunchtime, the shares had settled above $35, up 7 per cent on the offer price of $33, which itself was far above the original price range.
The world's No 2 car company has been off the stock market since the end of 2008 as it collapsed into bankruptcy, where it was kept running and restructured using $49.5bn of US government bailout money.
But yesterday, a cheer went up from traders on the floor as the shares returned to the public market, and a crowd of brokers jostled eight deep around the GM trading post. Outside, the company had covered the façade of the Exchange building with a giant banner and was exhibiting its latest models in the heart of the New York financial district.
Dan Akerson, a former telecoms industry boss installed as GM chief executive for the flotation, said the company would never forget the support it had received from taxpayers, and promised to forge a "new, different and better" company. "We know how we arrived here. We know what went wrong. And I believe we learnt from that."
GM and Chrysler were bailed out by the Bush and Obama administrations, which feared that thousands of suppliers would also go under if they shut. Ford was the only "Big Three" Detroit car manufacturer not to take government money.
Speaking on a conference call with reporters after ringing the Exchange bell, Mr Akerson suggested that GM's return to the stock market marked the end of its time as "Government Motors". He said: "The average taxpayer in the US should look at this particular transaction as very, very positive. Ford took a different path, but we arrived at about the same position. We're both viable companies on a level playing field. At this point, the best product wins."
The combination of common and preferred shares sold, plus the over-allotment of additional shares available for sale in the after-market, makes GM's the largest initial public offering in financial history.
GM shed billions of dollars in liabilities to retired employees and to its creditors thanks to the bankruptcy, and cut down on the number of dealerships, factories and brands. It is focusing now on four brands in North America – Chevrolet, GMC, Buick and Cadillac – as well as Vauxhall and Opel in Europe.
In investor roadshows to pump prime demand for the shares, GM has talked up its position in China, where it is the best-selling foreign car maker with a 14 per cent share of the fast-growing market. But North America remains its most significant market and analysts have noted that US demand for cars is still far below the peak seen before the credit crisis.
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