Daily Management Review

GM to buyback $5 billion in shares


03/09/2015




American vehicle manufacturing giant General Motors Co.  has announced Monday that it would opt for a $5 billion share buyback. The company has gone ahead with this landmark move to prevent further qualms with some of its investors.

The company has also noted that it plans to maintain operating margins of up to 10% in the long-term and to keep a $20bn minimum cash balance every year. In return to these measures by the company, the head of the dissident investor group, Harry Wilson, has noted that he would drop his candidacy to a seat on GM’s board.

Starting from the year 2016, the company will declare its capital return policy to the market. It will also boost its quarterly dividend to 36 cents a share from 30 cents in the previous terms.

 Sharing the update with the investors, GM CEO Mary Barra said, “We will continue to invest in innovative technologies and world-class vehicles that will deliver sustained profitable growth and maximize returns to shareholders.”

The Detroit-based carmaker noted that it could aim for a 20% or higher return on invested capital.
With these plans on track, the company’s shares got buoyant and went up 2.4 percent at $37.42 in afternoon trade.

Harry Wilson, one of the dissident investors, was a member of the auto task force which was set up by the US Federal government to manage the bankruptcy restructure of General Motors in 2009. He praised the recent measures and believed that it would provide investors with an easy understanding of the company’s cash investments in future.  

References:
http://www.digitallook.com/news/international-companies/gm-bows-to-pressure-implements-5bn-buy-back--659477.html

http://www.reuters.com/article/2015/03/09/us-autos-gm-shares-idUSKBN0M50VR20150309

 






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