General Motors to Sell 17 Percent Equity Stake in Suzuki
Will retain 3 percent, continue strategic alliance
General Motors Corp. (NYSE: GM) today announced it would reduce its equity stake in Suzuki Motor Corp. from 20.4 percent to 3.0 percent, by selling 92.36 million shares. The strategic alliance between GM and Suzuki will continue.
GM plans to sell these Suzuki shares, representing 17.4 percent of the shares outstanding, through the Suzuki open-market buyback program and through market sales if necessary.
GM currently holds a total of 108.66 million Suzuki shares, which had a closing price of JPY 2500 per share on March 3 on the Tokyo Stock Exchange. Based on this market value, GM expects to realize cash proceeds of approximately U.S. $2 billion from the sale of 92.36 million Suzuki shares, which will enhance the strength of GM’s balance sheet and liquidity position.
“GM has a great deal of respect and admiration for Suzuki based on our long and productive history of working together,” said Rick Wagoner, GM chairman and CEO. “Our relationship is strong, and we look forward to our continued partnership. This transaction will allow us to preserve our business relationship, while further building up GM’s already significant liquidity position during this critical phase of our turnaround.”
GM has held an equity stake in Suzuki since 1981, when it purchased approximately 5.3 percent of the Suzuki shares outstanding. GM’s stake was diluted to 3.5 percent in subsequent years, but in 1998 GM increased its holding in Suzuki to 10 percent, and to slightly over 20 percent in 2001. During this time, the companies have been involved in various joint projects in product development, advanced technology, global purchasing and supply chain management, and product distribution. Specific projects including collaboration in fuel cell and hybrid systems development, joint operation of CAMI Automotive, Inc. in Canada, the manufacture of a new medium-size SUV at the joint venture facility, and the cross-supply of OEM vehicles will continue. In addition, GM and Suzuki plan to work together on a proposed new automatic transmission program.
The sale by GM of a 17 percent equity stake in Suzuki, including cash proceeds received and any potential gain on sale, will be recorded in the first quarter. Based on current market value, GM expects a pre-tax gain on the sale in the range of US $550-$750 million. The tax rate on the Suzuki transaction is expected to exceed statutory rates largely as a result of certain tax credits that the transaction will eliminate.
GM press: 2/6/06
>>>For Sale? Clicky!<<<
-----The orginal Mr.Goodwrench on the JBO since 11/99-----
Thats good news for Suzuki... Now they don't have to sell GM's rebadged Daweoo crap...
Maybe now we'll see the REAL Swift...
^^^^
AMEN!!!!
this is fantastic news...too bad it's too late that GM bastardised Suzukis trucks. taking away they're true off-road capability and turning them into "car" like unibody Rav-4/CRV clones. But i wonder...with GM selling off they're shares of Subaru and now Suzuki if that will kill the Suzuki/Subaru car that they were developing before i left Suzuki last year?
"Formerly known as Jammit - JBO member since 1998" JBOM | CSS.net
MKSkud wrote:Thats good news for Suzuki... Now they don't have to sell GM's rebadged Daweoo crap...
Maybe now we'll see the REAL Swift...
I could not agree more!!! Shuffling Daewoo crap is such a bad idea. Especially when we can have a fun to drive Opel Corsa instead of Kalos/Aveo.
And Suzuki reliability record has plummeted ever since Daewoo went into their line-up,
>>>For Sale? Clicky!<<<
-----The orginal Mr.Goodwrench on the JBO since 11/99-----
General Motors and Suzuki Motor Corp. will continue making and selling cars together even after GM sells most of its stake in Suzuki.
The strategic alliance will continue, says GM Asia Pacific President Troy Clarke.
On Tuesday, March 7, GM plans to sell 17.4 percent of Suzuki into the open market, as Suzuki concurrently buys back about the same number of shares. The move will leave GM with 3 percent of Suzuki.
GM will raise about $2 billion in cash from the sale. Clarke predicted GM will book a pretax gain of between $550 million and $700 million.
Suzuki will keep its 11 percent stake in GM Daewoo Auto & Technology Co. in Korea. Suzuki and GM will continue to jointly own CAMI Automotive Inc., a car-making venture in Ingersoll, Ontario. Both will continue making vehicles for sale by both GM and Suzuki.
CAMI assembles the Chevrolet Equinox and Pontiac Torrent SUVs. It will add the Suzuki XL-7 SUV in the fall.
Suzuki's contract to buy GM Daewoo cars for sale in North America covers the life of the current models. At the end of those models' life cycles, Suzuki could develop its own replacements or contract to buy the next-generation cars from GM Daewoo
GM won't comment directly on whether GM might also sell all or part of its 12-percent stake in Isuzu Motors Ltd.
GM originally bought 5 percent of Suzuki in the spring of 1981. After that stake dipped to 3.5 percent due to Suzuki's issuing additional shares, GM bumped its stake up to 10 percent in 1998, then to 20 percent in 2001.
At the time of those increases, GM's then-Chairman Jack Smith and other executives spoke of using Suzuki to develop inexpensive vehicles for sale in China. But then GM bought part of the assets of bankrupt Daewoo Motor and turned instead to the Korean carmaker to design its small cars for China and elsewhere.
>>>For Sale? Clicky!<<<
-----The orginal Mr.Goodwrench on the JBO since 11/99-----
