General Motors plans to sell 17.4 percent of its ownership in Suzuki Motor for $2 billion, a move that will drop the U.S. auto giant from the top shareholder position to the seventh largest shareholder in the Japanese company.
Suzuki plans to pay 2,490 yen ($21) per share for the 92.36 million shares that GM intends to sell. The deal will aid GM as it attempts to get back into the black after losing $8.6 billion in 2005. GM expects a pre-tax gain on the sale in the range of $550-$750 million.
“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 said it will keep a 3 percent stake in Suzuki. Furthermore, Suzuki will continue to hold its 11 percent stake in GM's South Korean subsidiary, GM Daewoo Auto & Technology, and continue the CAMI Automotive, Inc. joint venture in Canada to cooperate in fuel-cell technology.
GM has held an equity stake in Suzuki since 1981, when it purchased approximately 5.3 percent of the Suzuki shares outstanding. GM increased its holding in Suzuki to slightly over 20 percent in 2001.
GM sold its entire 20 percent stake in Fuji Heavy Industries in October 2005. Fuji Heavy Industries supplies ATV engines to Polaris and manufactures Subaru automobiles.
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