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Business

GM starts stock buyback to avoid proxy fight

General Motors has agreed to a massive stock buyback program in line with demands voiced by an investment group. The move is meant to head off a potentially divisive boardroom reshuffle leading to in-house bickering.

General Motors announced Monday it would buy back $5 billion (4.6 billion euros) in stock by the end of the year.

The move is part of a deal with an investment group lead by Harry Wilson who in return agreed to withdraw his hostile candidacy for the Detroit auto maker's board of directors.

Wilson had accused GM of hoarding too much cash to the detriment of shareholders and had originally sought a buyback totaling $8 billion.

Swift implementation

General Motors

had $25.2 billion in cash at the end of last year and would now maintain a balance of $20 million, aiming to keep investment-grade status. Chief Financial Officer Chuck Stevens said he did not expect ratings agencies to change their outlook of the company.

GM CEO Mary Barra said Monday the buyback would have come even without Wilson's interference.

"We were on a path to do this anyway," she said in a statement.

GM has earlier announced a 20-percent dividend increase when it released full-year figures last month.

Management added further returns to shareholders were under consideration for the second half of the year despite potential costs of its ignition switch recall and the impact of a possible economic downturn.

hg/cjc (Reuters, AP, AFP)

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