. General Motors to Sell 17.4 Percent Equity
Stake in Suzuki
Will retain 3 percent,
continue strategic alliance
DETROIT - General Motors
Corp. announced it would reduce its equity stake in Suzuki Motor
Corp. from 20.4 percent to 3.0 percent, by selling 92.36 million
shares. The strategic alliance between GM and Suzuki will continue.
GM plans to
sell these Suzuki shares, representing 17.4 percent of the
shares outstanding, through the Suzuki open-market buyback
program and through market sales if necessary.
GM currently
holds a total of 108.66 million Suzuki shares, which had
a closing price of JPY 2500 per share on March 3 on the
Tokyo Stock Exchange. Based on this market value, GM expects
to realize cash proceeds of approximately U.S. $2 billion
from the sale of 92.36 million Suzuki shares, which will
enhance the strength of GM's balance sheet and liquidity
position.
"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 has held an equity
stake in Suzuki since 1981, when it purchased approximately 5.3
percent of the Suzuki shares outstanding. GM's stake was diluted
to 3.5 percent in subsequent years, but in 1998 GM increased its
holding in Suzuki to 10 percent, and to slightly over 20 percent
in 2001. During this time, the companies have been involved in various
joint projects in product development, advanced technology, global
purchasing and supply chain management, and product distribution.
Specific projects including collaboration in fuel cell and hybrid
systems development, joint operation of CAMI Automotive, Inc. in
Canada, the manufacture of a new medium-size SUV at the joint venture
facility, and the cross-supply of OEM vehicles will continue. In
addition, GM and Suzuki plan to work together on a proposed new
automatic transmission program.
The sale by GM of a
17 percent equity stake in Suzuki, including cash proceeds received
and any potential gain on sale, will be recorded in the first quarter.
Based on current market value, GM expects a pre-tax gain on the
sale in the range of US $550-$750 million. The tax rate on the Suzuki
transaction is expected to exceed statutory rates largely as a result
of certain tax credits that the transaction will eliminate.
