Toyota to buy 8.7% of Fuji Heavy from GM
Reuters
TOKYO -- Toyota Motor Corp. will buy an 8.7 percent stake in fellow Japanese automaker Fuji Heavy Industries Ltd. from General Motors, which will dissolve its ties with Fuji, the companies said on Wednesday.
GM, which owns 20.09 percent of Fuji Heavy, has been struggling to repair a balance sheet dogged by huge pension and health care liabilities and address sliding U.S. sales amid cut-throat competition in the auto industry.
The U.S. automaker could use the cash as financing becomes more expensive following the downgrade of its debt to junk status this year by three top ratings agencies.
GM will sell its remaining 11.4 percent stake in Fuji Heavy, which makes Subaru cars and has an edge in all-wheel-drive technology, in the market.
Toyota will buy 68 million shares in Fuji Heavy and the two companies will study opportunities for tie-ups in research and development as well as production, Fuji Heavy said.
Fuji Heavy said it would end a joint-development project with GM's Saab brand and would book a 5 billion yen ($43.73 million) special loss in the current business year.
It revised its earnings outlook on Wednesday to reflect the one-off loss, saying it now expected a group net profit of 12 billion yen in the year to March, down 20 percent from its May projection of 15 billion yen.
Analysts have lately questioned the value of the Fuji Heavy-GM alliance as Subaru battles its own drop in sales.
Fuji Heavy recently began building a Saab model for GM, but their cooperation beyond that is limited to some joint parts procurement and collaboration on research and development.
GM also owns one fifth of Japanese minivehicle maker Suzuki Motor Corp. and about 8 percent of truck maker Isuzu Motors Ltd. Toyota has capital alliances with Japanese minivehicle maker Daihatsu Motor Co. and truck maker Hino Motors Ltd., which are both majority-owned.
Before the announcement, Fuji Heavy shares ended the day up 2.27 percent at
540 yen, while Toyota stock closed down 0.94 percent at 5,250 yen. The Nikkei average was down 0.36 percent.