David Einhorn’s hedge fund Greenlight Capital urged General Motors to split its common stock into two classes, a proposal that was swiftly rejected by the carmaker.
The company’s shares jumped 3.9% to $35.96 on Tuesday.
Greenlight Capital said the move would help the carmaker improve its financial flexibility and boost the stock’s value.
The plan would lower the company’s cost of capital and unlock between $13 billion and $38 billion of shareholder value, Greenlight Capital said.
“Our plan … would provide the company complete strategic flexibility without adding any default, refinancing, or balance sheet risk,” Einhorn said.
Greenlight Capital owned about 0.88% of General Motors’ shares as of Dec. 31, according to Reuters data.
GM said it expects to return about $7 billion in cash to shareholders in 2017, bringing total cash returns to about $25 billion since 2012.