DETROIT, MI – General Motors has announced that it is selling its 20 per cent stake in Fuji Heavy Industries (FHI), the parent of Subaru, for $700 million. The amount is below the $1.3 billion GM paid for the Fuji investment in 1999 and the $1.5 billion value it is valued on its books. The alliance between GM and FHI will end with the US carmaker refocusing its efforts and resources in the Asia Pacific region’s high-growth markets and with its other strategic partners. Toyota is purchasing 68 million shares, representing around 8.7 per cent, with FHI intending to buy the remaining 90 million shares on the open market.
“We’ve had a good partnership; however both GM and FHI came to the conclusion that there were not enough collaborative projects to sustain the alliance and that each of our interests could be better served through a different approach,” said Troy Clarke, GM group vice president and president, GM Asia Pacific. “We have a great deal of respect for FHI and Toyota . We wish them well in their new relationship.”
The divestiture of GM’s stake in FHI is expected to be completed in the fourth quarter.
Since GM acquired a stake in FHI in 2000, the companies have been involved in various joint projects in product development, advanced technology, global purchasing and supply chain management, and product distribution. GM currently partners with FHI on one production vehicle, the Saab 9-2x, essentially a Subaru made over to look like a Saab, although it is not a big seller, which will continue. Other joint arrangements with FHI will be dissolved over time. For example, a Saab version of Subaru’s B9 Tribeca seven-passenger crossover vehicle will be cancelled.
The sale would bring in money at a time when GM is burning through cash and pondering over a multibillion-dollar bailout of Delphi, its largest supplier of parts.
For Toyota, the Fuji stake will give the company access to Fuji's advanced battery technology at a time when Toyota has said it aims to sell a million hybrid electric vehicles a year by early next decade. Also, Subaru can now be used by Toyota to develop and produce vehicles in reaching its US sales goals. At a news conference in Japan, Mitsuo Kinoshita, a Toyota executive vice president, said his company would also use Fuji's "various advanced technologies."
With the Subaru deal, Toyota will control about half of Japan's car market.
Separately, Toyota has also increased its stake in Panasonic EV Energy, a crucial supplier of batteries for hybrids, to 60 per cent from 40 per cent.
Fuji is developing advanced batteries that it says last longer than the batteries currently used in hybrids and can better handle temperature extremes.
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