Report: China's Largest Automaker To Invest In GM

gm chevy Report: China's Largest Automaker To Invest In GMSAIC Motor Corp., China’s largest automaker and a joint-venture partner with General Motors, is preparing to buy about $500 million worth of stock in the Detroit automaker, according to a newspaper website.

The Wall Street Journal reported Friday that SAIC is one of several foreign investors who could buy GM shares worth more than $1 billion as part of an initial public stock offering scheduled for Nov. 18. GM and SAIC wouldn’t comment on the report when contacted by The Associated Press.

The U.S. government, which now owns 61 percent of GM but is looking to reduce its stake to around 40 percent in the IPO, has said the company would seek foreign investment as well as investment from the U.S.

Foreign investment in U.S. automakers and other companies is common.

Investment from sovereign wealth funds is considered good for a company because the funds tend to hold stakes for a long time, providing stability, the newspaper said. But it’s also a touchy issue for the Obama administration, especially if some individual investors in the U.S. are unable to buy shares in the IPO.

U.S. taxpayers gave GM $50 billion to get it through bankruptcy protection last year. The automaker has repaid or plans to repay $9.5 billion, and the government hopes to get the remaining $40 billion back through the IPO and several follow-up sales.

A final decision by SAIC could come in the next few days, according to the newspaper, which cited people familiar with the situation that it did not identify.

GM and its investment advisers plan to release the stock’s final price on Wednesday. The actual sale will take place on Thursday. The U.S. government and GM’s other owners are selling 365 million shares of common stock. The IPO target price is between $26 and $29 per share. In addition, GM is selling 60 million preferred shares for about $50 each. The preferred shares will pay a dividend of 5.5 to 6 percent per year, a person briefed on the matter told The Associated Press Friday.

The first GM and SAIC joint-venture Buick factory opened in Shanghai in 1998. In December, the two companies announced plans for a venture to sell vehicles in India. In that deal, SAIC committed $350 million to the India venture, and GM agreed to turn over 1 percent of Shanghai GM, their main joint venture, giving SAIC a controlling 51 percent of the company.

SAIC and GM also have a highly successful joint venture in southern China, SAIC-GM-Wuling, whose minivans have been top sellers thanks to government policies encouraging sales of small, energy efficient vehicles.

(Copyright 2010 by The Associated Press. All Rights Reserved.)

  • Steve

    They could just move there and I would be totally happy with that. They have not changed trust me. As an ex-salaried employee I still have my ties their and it is the same stinkin thinkin management process. Thomas Stephens was a douche-bag 12 or 13 years ago as a VP and now he is higher up the corporate ladder. Its so sad how they fool the average Joe. Just go away GM. We definitely do not need you here in the states.

  • Mark

    Steve your right; Global economies will devaste our middle class! Weather your mgt or union the bottom line is that the powers that be, both scene and behind the scenes are willfully cruching the US Middle classes. We are stupid enough to let it just happen. I was mgt at Daimlerchrysler (Hiel!) when the bottom just started to fall out, thank God I was one of the first out of the door , credit was still flowing and the business I have had for a decade is florishing. Good Luck in todays economy in Detroit !!!

  • Hon

    ‘Just go away’ (?!)- I here that when I’m on the East and West coast all the time, as they mostly all seem to hate anything GM, Ford, Chrysler – but to hear that from 2 ex-workers, wow.

    Funny – you Guys think the company (GM) sucks but the Chinese sure as heck don’t think so. Not saying either of you are wrong but just be careful what you ask for. If GM or any other major USA company do ‘just move there’ , it won’t be the last I assure you…

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