GM becomes a public company again

GM just re-emerged from bankruptcy and the IPO looks to have been quite successful. From The Globe & Mail (comments in square brackets by me):

They all contributed to what was perhaps the most successful sale in the 102-year history of the company as its new shares began trading Thursday. Investors snapped up 452.6 million shares in the reborn auto maker, none of which carried a rebate, an interest-free loan or even a set of floor mats.

The shares rose 4 per cent, or $1.19, to $34.19 on the New York exchange [IPO price was $33].

...

The U.S., Canadian and Ontario governments and the United Auto Workers will all retain a stake in GM for now, but the U.S. government reduced its ownership to a little more than one-third through IPO. The three governments bailed out GM with about $60-billion worth of taxpayers’ money in 2009, with Canada and Ontario providing $9.5-billion of that.

Chris Liddell, who was appointed GM’s chief financial officer after it emerged from Chapter 11 bankruptcy protection, summed up a couple of decades of the company’s prior history.

“We used to be [a] $100-billion finance company and $100-billion pension plan with a small car company attached,” Mr. Liddell told reporters during a conference call Thursday. “We have to get away from that business model. We have to get back to making cars and having that driving the economics of the business.”

Bankruptcy cleansed the auto maker of tens of billions of dollars in debt, helped eliminate tens of thousands of jobs and slashed hourly labour costs in both Canada and the United States to the same level as those of the Japan-based auto makers.

While those moves addressed the cost side of the ledger, the revenue side has also improved.

Each 2010 Buick LaCrosse GM sells generates about $7,800 more in revenue than the 2009 model, said analyst David Whiston, who follows the auto industry for Chicago-based Morningstar Inc.

“Simply put, GM makes products that consumers are willing to pay more for than they used to. GM no longer has to overproduce to attempt to cover high labour costs and then dump cars into rental fleets (which hurts residual values).”

Regardless of what one thinks are the merits of investing in GM (the ticker symbol remains the old GM), the strong pre-IPO and post-IPO responses are good for the company and the economy. This is the second largest IPO in US history (not adjusted for inflation) and the underwriters made an estimated $248 million selling the shares. The stock market is valuing GM at around $50 billion right now, which compares to Toyota's market cap of around $242 billion.

It's difficult to say how good future prospects are but the company is far more profitable and isn't burdened as much with legacy costs. The biggest loser in all this is probably Ford, which is still burdened with some legacy costs that GM shed during the bankruptcy process.
 
The Globe & Mail does a good job summarizing some of the key numbers:  

To bail out GM, the U.S. government provided $50-billion (U.S.), while Canada and Ontario put up $9.5-billion.  
GM later repaid $9.5-billion of loans to the U.S. and $1.3-billion to Canada and Ontario.

In the IPO, the U.S. sold 358 million shares at $33 apiece, for a total of $11.8-billion of proceeds.

Canada sold 30.5 million shares at $33 apiece for total proceeds of $1.005-billion.

The sale leaves the U.S. with 554.4 million shares, currently worth about $18.95-billion.

It leaves Canada and Ontario with 144.6 million shares, currently valued at about $4.94-billion.
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Stock sold: 35 million shares at $33 (U.S.)

Book value: $15 a share or $525-million