DETROIT -- General Motors shares rallied on Tuesday after a Wall Street analyst said the possible sale of a stake in its finance arm, and health care concessions from its leading labor union, could yield a substantial premium to GM shareholders.
Himanshu Patel of J.P. Morgan Securities said in a note to clients the partial sale of GMAC, coupled with "modest health care concessions" from the United Auto Workers union, could yield about $9 per share of value to owners of GM stock.
GM shares finished up 4.1 percent to $35.87 on the New York Stock Exchange, after rising as high as $36.45.
Shares of GM's crosstown rival Ford Motor Co. rose 30 cents, or 2.85 percent, to $10.82.
The gain at Ford came after its rental car unit, Hertz Corp., filed for an initial public offering on Monday. The No. 2 U.S. automaker said it may proceed with the offering or sell Hertz to a third party as a way to shore up its finances.
GM posted a $1.1 billion first-quarter loss, and it is struggling to reverse U.S. sales and market share declines. Patel said that while it was a high-risk investment, the world's leading automaker "still offers notable upside potential."
GM has said it is in advanced talks to sell a controlling stake in the commercial mortgage finance division of GMAC, but it has not ruled out other possible GMAC spinoffs.
The UAW, meanwhile, said last week that it was willing to work with GM to reduce employee health care expenses, which are expected to grow to $5.6 billion this year.
GM is the nation's leading private provider of health care benefits and has said it urgently needs to reduce health care spending.
Patel has an "overweight" rating on GM shares.
Deutsche Bank analyst Rod Lache, who has "sell" rating on GM, said in a separate research note on Monday that GM's savings from any UAW health care concessions were unlikely to surpass a total of $300 million.
"Unfortunately this equates to less than one year's health care inflation," Lache said.