April 12, 2006
General Motors to sell its stake in Isuzu
Detroit, Michigan – General Motors announced it would sell its 7.9 percent equity stake in Isuzu Motors Ltd. for U.S.$300 million, however the company’s commercial partnership with Isuzu will continue.
The Isuzu shares held by GM will be sold to Isuzu’s business partners and major shareholders, Mitsubishi Corp., Itochu Corp. and Mizuho Corporate Bank.
“GM’s 35-year relationship with Isuzu has been strong, and we look forward to our continued partnership,” said Rick Wagoner, GM chairman and chief executive officer. “We will maintain our strategic relationships with Isuzu in the many different areas of cooperation we have established over the years. At the same time, GM will take another step to enhance our liquidity position.”
GM has held an equity stake in Isuzu since 1971, when it purchased approximately 34 percent of the Isuzu shares outstanding. Between 1971 and 1998, GM increased its stake to 49 percent from 34 percent. In 2002 as part of the Isuzu restructuring, GM cancelled shares related to its 49 percent stake and invested fresh capital of $500 million primarily for the purchase of certain strategic commercial assets and for a new equity stake of 12 percent in Isuzu. Between 2002 and 2005 GM’s stake in Isuzu was diluted from 12 percent to the current 7.9 percent, due to conversion of Isuzu’s convertible bonds.
Financially troubled GM recently cashed in its 20 percent ownership in Fuji Heavy Industries (Subaru), and a 17 percent stake in Suzuki. It still owns 3 percent of Suzuki. GM has also agreed to sell 51% of its stake in General Motors Acceptance Corporation (GMAC), its auto financing arm.