GM’s IPO may come as early as next month after a long period of media speculation about the event and comments from the car company’s CEO Ed Whitacre, according to several media reports. GM has apparently hired Morgan Stanley (NYSE: MS) and JPMorgan Chase (NYSE: JPM) to handle the underwriting. The IPO will probably raise $20 billion at a valuation of the company that is between $60 billion and $70 billion.
GM is also said to be seeking a $5 billion line of credit to pay for planned expansion. Many of the IPO shares will probably go to the US Treasury to pay back $50 billion in taxpayer funds that the government invested in the car company’s bailout. The US owns about 61% of GM.
The IPO plan may face headwinds. Domestic cars sales increases slowed substantially in June compared to the first five months of 2010 GM’s US sales were up only 13% and a slowing economy could result in worse numbers in July and August. GM’s only bright spot is China where sales rose 48% in the first half. GM may want to move its headquarters to Shanghai before it tries to go public
Douglas A. McIntyre
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