America’s biggest carmaker has become the latest large US corporation to embark on a share buyback, saying that it would repurchase $5 billion of its stock to avert a clash with an activist investor who helped to rescue it from bankruptcy (Alexandra Frean writes).
Harry Wilson, a key member of the automotive task force set up in 2009 by President Obama to turn around failing car companies, demanded a seat on General Motors’ board last month and called for an $8 billion share buyback by next year. Mr Wilson represents four hedge fund investors in GM.
In announcing the buyback yesterday, GM said that the move had already been under consideration. Mr Wilson called it “a win-win outcome” and said that he would withdraw his candidacy for the board.
GM’s move comes amid a time of record buyback rates, which are leaving investors chasing a dwindling number of stocks and driving up markets at a time when many earnings estimates are weakening.
Among Standard & Poor’s 500 index companies, planned stock buybacks rose to $104.3 billion last month, surpassing the previous monthly high of $99.8 billion in July 2006, according to Trim Tabs Investment Research.
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Last week Best Buy, the big box electronics retailer, authorised $1 billion in buybacks over the next three years, its first stock repurchases since 2012. It came after 28 companies announced buybacks of at least $1 billion last month.