Setting a goal of buying back every share of stock owned by the United States Treasury within the next 18 months, General Motors announced today that it will acquire 200 million shares.
The shares will be purchased at an 8 percent premium - $27.50 per share - a price mutually agreed upon by the automaker's CFO and Treasury officials. That figure is well shy of the $70 per share the government needed to receive in order to break even.
The Treasury will still own about 19 percent of GM - or about 300 million shares - at least until the buyback is completed.
GM, which was bailed out by the U.S. and Canadian governments as part of its 2009 bankruptcy, has struggled to shed the "Government Motors" image, CEO Dan Akerson acknowledged.
"This announcement is an important step in bringing closure to the successful auto industry rescue," Akerson said in a statement released to members of the media. "It removes the perception of government ownership of GM among customers and it demonstrates confidence in GM's progress and our future."
As a result of the 200 million share buyback, GM will be subject to a $400 million fourth quarter charge. However, GM's earnings per share will actually be increased since its total shares outstanding will be reduced by 11 percent.
The Detroit-based automaker says that the initial buyback will be completed by the end of this month.