At first blush most people will probably be outraged China would buy a stake in GM. This is from the impending IPO (or initial public offering).
In a sign of the changing fortunes of the world's top two economies, China's biggest auto maker, SAIC Motor Corp., is negotiating to acquire a stake of about 1% in General Motors Co. worth about $500 million, according to a person familiar with the matter.
The U.S. auto maker also is prepared to sell more than $1 billion worth of shares to sovereign wealth funds in the Middle East and Asia. Combined, the sales would give foreign investors roughly 16% of the shares to be sold next week under an initial public offering of stock, and give them a stake of some 4% in the Detroit auto maker.
Pretty incredible huh? We bail out GM and now China buys a piece? That said, with the impending trade war and considering GM's sales and existing joint ventures in China this should come as no surprise.
Shame the government didn't do a better job of negotiating U.S. jobs in the bail out mix.
GM's IPO is due to be priced next Wednesday:
The reception six GM executives have received from investors on this week's roadshow to promote the IPO has been strong enough to sell the shares at the high end of the $26 to $29 offering range or above $30, said the people, who asked not to be identified because the information is private.
SAIC Motor, GM's partner in China, will probably be among the buyers, three people familiar with the plans said.
GM will probably exercise its so-called greenshoe or overallotment option, granting underwriters 54.8 million more shares, the people said. That would help the U.S. Treasury Department recoup more of the public's $49.5-billion investment in the automaker.
Strong demand for the IPO may also help secure a higher price when the U.S. sells most of its shares in later offerings.
Noreen Pratscher, a GM spokeswoman, declined to comment.
The offering of 365 million shares, or 24% of the automaker's stock, is already multiple times oversubscribed, one of the people said.
Banks arranging the sale will continue to take orders until the roadshow ends next week, to avoid the perception that any potential investors were crowded out, the person said. GM is to price the IPO on Wednesday.