General Motors Company (NYSE:GM) received a setback lately as one of its prime buyers, the Canadian government has put the company in tougher times ahead. Canada has plans to make a move into different realms. This shall help in balancing the national budget and focusing or limiting exposure to the equities market in the US. Canada has chosen to sell off a large chunk of its portfolio to esteemed investment banking entity – Goldman Sachs.
Canada To Sell Off Shares To Goldman Sachs
GM traded off 73.4 million shares in an unregistered trade that is slated to be over by April 10, 2015. The trade has a gross value of $2.69 billion. Canada had poor time owing to falling prices of oil during the past months. Hence, in order to balance its books, the nation has chosen to do this trade. Quite concomitantly, the Canadian government is limiting the exposure of myriad of US equity market shares to the large number of Canadian taxpayers.
Why This Sell-Off?
The sell-out is a humongous one and Canada shall sell off remaining shares that are in GM. The sales proceeds shall be converted easily and feasibly over-time to the Canadian currency. Financially, the Canadian dollar is at a trough and this deal makes sense at such a weak point for the economy.
GM’s Shares Purchase Was Meant To Be Temporary
GM was duly restructured 2009-10 onwards and the Canadian and the US governments were a part of it. Both the national governments are currently out of stock. At this premise, General Motors Company (NYSE:GM) needs to hold itself up. It is restricted for any connection or participation in block trade. There is a belief that the company shall remain an active entity throughout the open market, as per the repurchase plan, in order to take due advantage of the price volatilities.
Analysts are estimating prices for GM at the highest mark of $51. Canadian Finance Minister, Joe Oliver corroborated that the nation’s stake in GM was meant to be a temporary one and it has intentions to return the private shares with time.