DealZone

Deals wrap: GM to file for IPO in August?

July 23, 2010

Government-rescued automaker General Motors plans to file its registration for an initial public offering during the week of August 16, according to a Reuters report that cited two people with direct knowledge of the preparations.

The public offering is seen as necessary for GM to reduce the government’s ownership in the company after it was forced to accept a $50-billion bailout last year.

The Reuters story puts the potential move in perspective:

An IPO for the U.S. automaker, which was restructured in bankruptcy last year, would be the biggest U.S. stock offering since Visa Inc’s $19.7 billion March 2008 IPO and one of the biggest IPOs of all time.”

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Talk about odd timing. After guiding De Beers – the world’s biggest diamond producer – to first-half net earnings of $255 million, compared to just $3 million for the same period the previous year, CEO Gareth Penny announced his resignation. “I think you have to signal this quite openly to the market that you’re going to engage in this sort of process otherwise the rumor mills just start,” Penny told Reuters.

An analyst quoted in the Reuters story, said Penny’s sudden departure after 22 years with the firm may be due to De Beers being forced into a $1 billion rights issue last February after debt piled up and revenues dried up during the global downturn.

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In another bit of odd news, a shareholder has spoken out against a $4.5-billion takeover bid for struggling UK autoparts maker Tomkins. Standard Life Investments, a 2.9 percent shareholder, told Reuters it was disappointed by the Tomkins board agreeing to open its books to the consortium of Onex Corp and the Canada Pension Plan Investment Board.

Guardian business columnist, Nils Pratley, gave kudos to Standard Life hedge fund manager David Cumming for saying he would vote against the 325 pence cash offer. Pratley added: “Such dissent is rare. Too often, fund managers say nothing even when they believe the suggested offer price is too low. Many don’t look beyond the upward kick to their next quarterly performance statistics; alternatively, they gamble that the bidder can be nudged a little higher on price.”

Photo credit: A GM inflatable sign is seen during the Barrett-Jackson auto auction in West Palm Beach, Florida April 11, 2009. REUTERS/Carlos Barria

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