General Motors Co said on Wednesday it will buy back 200 million of its shares from the U.S. Treasury, which intends to sell the rest of its GM stake over the next 15 months, bringing to an end ownership that led to the nickname "Government Motors."

Chief Financial Officer Dan Ammann said GM will pay $5.5 billion, or $27.50 a share, for the Treasury stake in a deal expected to close by year-end. That represents a 7.9 percent premium on Tuesday's closing price.

GM shares rose about 10 percent to $28.05 in premarket dealings.

Treasury said it will sell its remaining stake of about 300.1 million shares "through various means in an orderly fashion" over the next 12 months to 15 months, and could begin the process as soon as January.

GM received about $50 billion from the U.S. Treasury as part of its 2009 bankruptcy restructuring in 2009 under the Troubled Asset Relief Program (TARP).

The government bailed out GM and Chrysler Group in a move to protect jobs - a number it put at more than 1 million.

"TARP was always meant to be a temporary, emergency program. The government should not be in the business of owning stakes in private companies for an indefinite period of time," Assistant Secretary for Financial Stability Timothy Massad said in a statement.

"Moving to exit our investment in GM within the next 12 to 15 months is consistent with our dual goals of winding down TARP as soon as practicable and protecting taxpayer interests."

Ammann said the move and resulting Treasury plans will remove an "overhang" on the stock that has hurt sales and bring an "element of closure" to the bailout.

Ammann said GM will end the year with estimated liquidity of about $38 billion, even after the deal. That will add to earnings per share by reducing the number of outstanding shares by about 11 percent.

GM will take a charge of about $400 million in the fourth quarter tied to the buyback.

In addition, Treasury has agreed to relinquish certain governance rights, including required levels of U.S. manufacturing and barring the purchase of corporate jets, Ammann said. Senior executive payment caps under TARP remain in place.

(Reporting by Ben Klayman; Editing by Gerald E. McCormick and Jeffrey Benkoe)