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General Motors' IPO Still Leaves U.S. Government in the Driver's Seat

Some of the fine details may change as the actual General Motors IPO takes place, but GM's latest filings confirm that even after increasing the size of the GM IPO and kicking in additional shares owned by the U.S. Treasury, the U.S. taxpayer will still be the No. 1 shareholder in GM.

It's more than a little ironic that before the U.S. government bailed out GM and Chrysler starting in late 2008, the U.S. car companies spent an awful lot of time complaining that governments in Asia and Europe unfairly propped up their domestic auto industries.

I guess we'll know the auto industry is truly back to normal when at some point in the future, the U.S. government reduces its share to zero. I'm betting that the U.S. car companies will go right back to complaining about government interference at that time, if not sooner. Like all industries, the U.S. auto industry hates government interference, except when it helps them.

For now, GM doesn't have any room to talk. Even if the IPO sells out, the government will still have an unassailable controlling share of one-third of GM.

Selling out looks increasingly likely. GM certainly seems to think so, since it upped both the number of shares for sale and the asking price on the eve of the IPO. GM today announced a 30% increase in the proposed size of the offering, to 478 million shares, from 365 million. Just yesterday, it boosted its estimated pricing to $32 to $33 per share, from $26 to $29.

Even if all the options to increase the number of shares are exercised, the U.S. Treasury will still have a 33.3 percent share, which constitutes an effective veto over big decisions at GM. The other biggest shareholders also remain, post-IPO.

National and provincial Canadian governments will own a combined, projected 9.3 percent of GM, down from 11.7 percent. The UAW Retiree Medical Benefits Trust will shrink from 19.9 percent to 13.3 percent. Motors Liquidation, better known as "Old GM," which is not participating in the IPO, stays steady at 23.9 percent ownership.

As previously noted, that makes it impossible for GM to shed its unwanted "Government Motors" status entirely. At least the IPO reduces U.S. government ownership below 50 percent.


Graphic: GM