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Government may own GM longer if stock offering reduced

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Government may own GM longer if stock offering reduced

08:33 AM

CAPTIONBy Mark Duncan, AP

General Motors isn't exactly a company known for thinking small, but it may be downscaling its ambitions when it comes to its initial public offering.

It will probably seek to raise a mere $8 billion to $10 billion, a smaller sale than the automaker originally targeted, says Bloomberg News citing two unnamed "people familiar with the matter."

That amount would only take a small chip out of the $49.5 billion that the U.S. government, meaning taxpayers, has sunk into saving GM. At present, the government owns 61% of GM. The IPO is slated for November. It would represent that government officials are taking the attitude now that holding GM stock longer term makes sense if it will deliver a higher share price, rather than just dumping it all as soon as possible.

"They're taking a more sober view," Bloomberg quotes Joe Phillippi of consultants AutoTrends in Short Hills, N.J., as saying. "The real question is what's the price? There are questions in people's minds about the market and the world's economies."

A reduced target for proceeds from the IPO may reflect downsized ambitions from GM's incoming CEO, Dan Akerson. Outgoing CEO Ed Whitacre, who remains as chairman, reportedly favored selling as much of the government's stake as possible.

Just a day ago, Drive On reported that a government watchdog believes that GM stock would have to hit a share price of $133 -- $40 more than the old stock was ever worth -- in order to competely repay taxpayers.

One thing is for sure, though. The government will be able to have its say about how things should go on the sale with GM management, given its majority ownership stake.



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