Stellantis recently announced that it will repurchase 69.1 common shares from GM. The shares are worth an estimated 923 million euros, or $919 million, roughly 2.2 percent of the company’s share capital.
GM presently holds the stake in Stellantis in warrants, and will convert it into equity shares for Stellantis to purchase this Thursday, September 15th. The warrants were originally issued by Peugeot SA as part of a deal to sell GM’s Opel-Vauxhall business in 2017. Later, in 2021, Fiat Chrysler and Peugeot merged to form Stellantis.
The recent share buyback also includes payment to GM in the form of 1.2 million common shares of French car parts supplier Faurecia SE, as well as roughly 130 million euros in cash for rights to dividends paid by PSA and Stellantis.
Stellantis’ purchase of common shares from GM will be carried out with authorization handed down at the shareholders’ meeting held April 13th, 2022.
Meanwhile, GM announced last month that its board of directors has authorized the reinstatement of quarterly cash dividend payments to shareholders after the practice was suspended in April of 2020 in the wake of uncertainty stemming from the COVID-19 pandemic. The GM Board stated that it authorized the dividend payments on GM’s outstanding common stock at a rate of nine cents per share, with the first dividend payments sent to shareholders on September 15th.
Additionally, GM stated that it will resume “opportunistic” share buybacks as confidence in the market increases. The GM Board increased the capacity of the company’s repurchase program from $3.3 billion to $5 billion.
According to GM CFO Paul Jacobson, the automaker’s “consistently strong earnings, margins and cash flow, our investment-grade balance sheet, and the achievement of several significant milestones in our growth strategy enables us to invest aggressively,” returning excess free cash flow to shareholders.
GM is poised to invest over $35 billion through 2025 as it moves forward on its growth plan, which includes rapid expansion of its all-electric vehicle portfolio and domestic EV manufacturing capabilities.