GM unloads most of its Suzuki stake, raises $2 bln

TonyPSchaefer · Mar 6, 2006

Mar 6, 2006 â€” By Chang-Ran Kim, Asia auto correspondent

TOKYO (Reuters) - Embattled U.S. auto giant General Motors Corp. said on Monday it would sell 17.4 percent of its stake in Suzuki Motor Corp. back to the Japanese car maker, raising around $2 billion in much-needed cash to restore its tattered balance sheet.

The sale would leave GM with a pre-1998 level of 3 percent in Suzuki.

It ends months of speculation about a possible unraveling of their equity relationship after the world's biggest auto maker unloaded its entire 20 percent stake in Japan's Fuji Heavy Industries Ltd. last year, also to raise money.

The Detroit-based auto maker lost $8.6 billion in 2005 and is undergoing sweeping restructuring driven in part by new board member Jerry York, an aide to GM's largest individual shareholder, Kirk Kerkorian. York has called for more aggressive turnaround efforts, including the sale of various assets around the world.

GM and Suzuki, which first formed a capital tie-up in 1981, said they would continue to work together at the operational level, including through joint product distribution, development of advanced powertrain technology, ownership of a Canadian assembly plant and Suzuki's 11 percent equity participation in GM's South Korean unit, GM Daewoo Automotive & Technology Co.

"Our relationship is strong, and we look forward to our continued partnership," GM Chief Executive Rick Wagoner said in a statement.

"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 said it expected a pre-tax gain of $550 million to $750 million from the sale.

Suzuki, a successful compact car maker expecting its sixth straight year of record operating profits this year, said it would use cash at hand to buy back GM's 92.36 million shares in it for a maximum 229.98 billion yen ($1.97 billion).

The purchase, planned through an open-market buyback program before the Tokyo Stock March opens on Tuesday, would be made at Monday's closing share price of 2,490 yen.
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jayman · Mar 6, 2006

Well, so GM can keep the Grim Reaper away for a bit longer. That's nice.

It's odd how GM just can't seem to make any decent small fuel efficient cars, when you consider their relationship with Isuzu, Suzuki, and Opel AG.

EricGo · Mar 6, 2006

I was thinking that Suzuki *really* did not fit into the GM cachet:

PROFITABLE -- Wth ?!??
ECONOMICAL -- over GM's suv bones

galaxee · Mar 6, 2006

suzuki was a decent fit in the repair shop.

one or two major issues requiring you to be without your vehicle for a week at a time, per year of ownership.

GM unloads most of its Suzuki stake, raises $2 bln

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GM unloads most of its Suzuki stake, raises $2 bln

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