General Motors Company (NYSE:GM) will soon be split into two publicly traded stocks, if David Einhorn has his way.
The hedge fund billionaire believes that taking GM and spinning it off into two stocks will benefit the company greatly in the long run. The move is part of a larger capital allocation plan that would see one stock focus more on dividends, while the other would turn its attention toward capital growth.
Einhorn said that the move would add value to General Motors, while also lower its cost of capital. “It would provide the company complete strategic flexibility without adding any default, refinancing, or balance sheet risk.”
GM examined the move closely and ultimately determined that Einhorn’s move would not suit the company as well as he claims due to the fact that it would increase the stock’s risk, and this would not be in the best interest of company shareholders.
The suggestion by Einhorn comes following quarters and years of GM stock disappointing. Such a move could’ve helped revitalized a company that has not been able to deliver to its shareholders as well as it would’ve liked.
Einhorn says the dividend shares would net current shareholders a quarterly payout of $1.52 per share.
GM stock is up 2.4% Tuesday.
