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Rattner: GM's Speedy Rebound Drives Investor Appetite for 'Historic IPO'

November 15, 2010
3 min to read


DETROIT - The turnaround at General Motors Co. has come so far, so fast that the automaker's initial public offering likely will price at $30 per share or above this week, said Steven Rattner, the former head of the Obama administration's automotive task force, reported Automotive News.


Analysts had projected that GM's offering would price at $26 to $29 per share, allowing the U.S. government to sell about one-third of the 61 percent stake it took in the company for a bailout last year of nearly $49 billion.

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Speaking here today on the sidelines of an Automotive Press Association event, Rattner said he was hopeful about GM's prospects when the bailout was made. But the automaker has exceeded expectations with the speed and magnitude of its financial and operational rebound, Rattner said.


“I'm not sure most of us would have imagined that we would be sitting here now on the eve of a historic IPO and having it go on this successfully,” he said.


Rattner said CEO Dan Akerson and, before him, Ed Whitacre have done a good job of reforming GM's slow-moving, risk-averse culture. He said improved management has been the No. 1 reason for GM's newfound success.


That GM could post three straight quarters of solid net profitability, even during a recessionary auto sales climate, reflects the comprehensiveness of the turnaround, Rattner said.


Rattner used his luncheon speech to promote his new book, Overhaul - An Insider's Account of the Obama Administration's Emergency Rescue of the Auto Industry. Rattner was the task force chief from February to July of 2009.

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In his book, Rattner criticized congressional leaders who he said knuckled under to pressure from auto dealers to pass legislation requiring a formal appeal process for GM and Chrysler Group to institute planned dealer cuts.


GM ended up with 4,500 dealers when all the cuts were completed last month, or about 900 more dealers than it had intended to keep before congressional intervention.


Rattner said that GM still has too many dealers as a result of that intervention, according to the best opinion of many experts whom the task force consulted.


Dealer groups have argued that cutting dealers has not saved GM anything and has only cost them business by removing stores often for arbitrary reasons.


Rattner said he's confident that the Detroit 3 can avoid returning to onerous labor agreements next year when their master contracts with the UAW expire.

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Rattner said UAW concessions during the auto crisis have eliminated excess job classifications, antiquated work rules and a Jobs Bank that prompted the Detroit 3 to overproduce to keep UAW members working.


He said the Detroit 3 can continue their success, even with some sharing of their profits, if they can prevent a return to old work rules that restricted operating flexibility.


Rattner also said non-executive Chairman Whitacre's nine-month tenure in the CEO's role, which Akerson took over in September, shows why the automaker should separate the chairman and CEO roles. Rick Wagoner and Fritz Henderson also served as GM's CEO in the past two years.


“It's not a good idea for any company to go through four CEOs in 18 months,” Rattner said. “GM is the poster child of why you should split the jobs.”

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