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Mazda to announce change in major shareholder - update

Ford Motor Co could announce plans to sell a 20% stake in Mazda Motor Corp as early as Tuesday, the Nikkei business daily reported. Mazda said on Tuesday it would announce major-shareholder changes amid reports that Ford Motor Co would shed a stake of about 20% in its affiliate. CEO Hisakazu Imaki and other board members will hold a news conference at 6 p.m. (0900 GMT) at Mazda’s headquarters in Hiroshima, the company said.  

 

Ford’s expected sale of part of its controlling 33.4% stake is the latest sign of desperation at the US Big Three as they scramble to raise cash to survive the worst economic crisis since the Great Depression. The move had been expected after Japanese broadcaster NHK reported more than a month ago that Ford was looking to shed about a one-fifth stake.

At the time, Mazda had a market capitalization of ¥408.5 billion ($4.2 billion), valuing a 20% stake at around $850 million. At Tuesday’s closing price, Mazda was worth a significantly diminished $2.7 billion. Mazda’s shares jumped on an earlier Nikkei business daily report that the announcement could come on Tuesday. The stock ended the day 6.4% higher at ¥184.

Ford first took an equity stake in Mazda in 1979 and brought it under its control in 1996 as the Hiroshima-based carmaker struggled to survive. Since then, Ford has sent four of the last five CEOs. It has three executives on the board now -- Executive Vice President Phil Spender, CFO David Friedman and sales and marketing chief, Daniel Morris. The partners share vehicle platforms and engineering resources and jointly own assembly plants in the United States, Thailand and China.

Media reports have named trading houses Sumitomo Corp and Itochu Corp, auto parts maker Denso Corp, non-life insurance companies including Tokio Marine Holdings Inc as possible buyers of the Mazda shares. Mazda, which had cash or cash equivalents worth ¥215 billion at the end of September, is also expected to buy back a portion of its shares.

Slowing auto sales and the global financial crisis have sent shares of Ford plunging and its coffers are depleted. It reported a worse-than-expected $2.98 billion quarterly operating loss this month.

Detroit’s Big Three automakers -- General Motors Corp, Ford and Chrysler LLC -- are desperately lobbying the government to provide financial support to stay alive, with executives expected to amplify their calls for help at congressional hearings beginning on Tuesday.

Analysts have said they expected little short-term change to the relationship between Ford and Mazda given their closely intertwined operations and platform-sharing. Some say having a more stable set of shareholders would be positive for Mazda.

A day earlier, GM said it would sell the remaining 3% it held in Suzuki Motor Corp for $232 million. That transaction was completed on Tuesday. Earlier this year, Ford sold the premium Jaguar and Land Rover brands to India’s Tata Motors Ltd and is said to be looking for a buyer for its Volvo Cars arm. (Reuters)