DETROIT — The U.S. government plans to sell 40 percent of its General Motors stock by the end of the year and the rest of its shares within 12 to 15 months, officials announced Wednesday.
The government's exit from GM stock will mark the end of its direct involvement in an iconic U.S. company that nearly collapsed in 2009 before receiving a $49.5 billion bailout and returning to job growth and profitability.
GM said Wednesday that it would buy back 200 million shares from the U.S. Treasury Department by the end of December in a $5.5 billion deal. That would reduce the government stake from 26 percent to 19 percent.
The U.S. plans to exit its equity stake in GM in the next 12 to 15 months by selling its remaining 300 million shares in the market.
"This announcement is an important step in bringing closure to the successful auto industry rescue, it further removes the perception of government ownership of GM among customers, and it demonstrates confidence in GM's progress and our future," CEO Dan Akerson said in a statement.
GM said it would pay $27.50 per share in the buyback deal, reflecting a 7.9 percent premium over Tuesday's closing price of $25.59. The company will record a $400 million charge on its balance sheet in the fourth quarter.
At that share price, the government will take a loss. The government, which said it would sell the rest of its shares in an "orderly fashion" in the market, needed to sell its 500 million remaining shares at a price of about $53 to break even on the bailout. To avoid a loss now, the government would need to sell its remaining 300 million shares at a price of nearly $70.
The government has said it wanted to balance its desire to get out of the auto business with the desire to recover more funds for taxpayers.
Auto industry analysts have been expecting the U.S. Treasury Department to announce a resolution for its GM shares in early 2013. Some analysts have said a share buyback would be warmly received by the market and attract new investors to GM who have been scared off by the government's ownership position.
"From our point of view, this is very attractive to the company and to our shareholders," GM chief financial officer Daniel Ammann said. "It obviously brings some clarity and certainty around the U.S. Treasury exit and the time line of that, which has been a question mark in the marketplace."
After the bailout, which was started by President George W. Bush and continued by President Barack Obama, critics labeled GM as "Government Motors" and GM became a subject of political rhetoric in the 2012 presidential campaign.
"We have some market research that we've done over time that has suggested that government involvement in the business has had some impact on sales," Ammann said. "Therefore, as we move past this stage of the company's development, we would expect that to be a benefit — good for business, good for selling more cars."