Stellantis Repurchases Its Common Shares From GM
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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.
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Small detail:
I know you sourced the information from Reuters but I think the currency conversion they posted is incorrect. The Euro is worth more than the US dollar so €923 Million would be roughly $924 Million.
I thoujght they would have sourced it from the actual source, the Stellantis press release wihich can be found on the official global website stellantis and with dot com, Click menu, news, press releases and these days when I write this, the corresponding item is the very first titled “Stellantis and General Motors to Execute a Share Repurchase Transaction” dated September 13. 2022.
I had read it and had problems to understand.
GM should have gobbled even more stock in 2017 when PSA was seriously undervalued. Carlos Taveres is an excellent leader & holding PSA/Stellantis stock would open a path for GM sales in Europe.
Ultimately, GM needs one or more strong non Chinese partners. Should China take Taiwan them GM will be, primarily, an Americas-focused automaker. Regarding growth, Europe and Japan are respectively the 3ed and 4th largest markets, despite aging demos, making Honda & Stellantis natural allies.
GM can’t hold stock in Stellantis/PSA. This is due to regulatory/antitrust concerns, particularly with EU politics behind it.
In fact, GM didn’t hold any stock, they held warrants, basically stock options or IOUs, that could be converted to stock when they disposed of their holdings. That way they held no control over Stellantis.
I thought they would have sourced it from the actual source, the Stellantis press release wihich can be found on the official global website stellantis with com, Click menu, news, press releases and these days when I write this, the corresponding item is the very first titled “Stellantis and General Motors to Execute a Share Repurchase Transaction” dated September 13. 2022. I had read it and had problems to understand it.
That would be interesting..GM’s position re: China post Taiwan take over. GM China is almost as large as GM NA, higher volume lower margins. Coupled with I am guessing is 40% of GM parts being built there.
Japan’s domestic market is impossible to enter. See Saturn’s experience. Europe is oversaturated with brands and low margin. GM lost billions in Europe despite heavy investment.
GM is selling in Japan, as is Stellantis with Jeep and Opel, and maybe other brands, too.
Well, there goes Vauxhall and Opel for sure. This money comes at a good time for GM.
BTW, the original Adam Opel GmbH, the continuation from the founding in the 19th century, is still 100% owned by GM.
But the only business this company operates is the payment of old age pensions of those Opel pensionists who had already been in retirement on June 31st, 2017, i.e. at the moment of the passage of all the Opel/Vauxhall/GM assets in Europe (with 2 exceptions), which had been transferred to a subsidiary of the Adam Opel GmbH, renamed to Opel Automobile GmbH and sold to Peugeot S.A.
I.e., GM’s German subsidiary, the Adam Opel GmbH can close shop as soon as the last old Opel pensionists dies.
They held no control but received dividend. Furthermore, GM is a niche operation in Europe, antitrust concerns could be overturned on appeal, considering PSA was allowed to merge with FCA.
GM is selling in Europe Cadillac XT4 and Chevrolet Corvette.
As GM announced years ago, I expect GM to return to Europe with the new and electric Cadillacs Lyric and Celestic. Methinks that they will be well received.