Toyota (ADR: TM) to Buy 8.7% Stake in Rival Fuji Heavy Industries; General Motors (GM) to End Alliance with Fuji Heavy

Includes: GM, TM
by: Steven Towns

AP reported today that Toyota (ticker: TM) has agreed to buy an 8.7% stake in its domestic rival auto manufacturer, Fuji Heavy Industries, the maker of Subaru. (*Fuji does not have an ADR and it doesn't appear to be a current holding of iShares Japan ETF, ticker:EWJ.) Officials from Toyota said the 8.7% stake will cost them $315 million and will be purchased from General Motors' (NYSE:GM) own stake in Fuji Heavy. GM has reported that it plans to sell its remaining 11.4% stake as well, effectively dissolving its alliance with Fuji. This will make Toyota the largest shareholder of Fuji.

The following is a summary of AP's article:

• Toyota Executive VP Mitsuo Kinoshita denied the deal was a bailout for GM
• Kinoshita said GM and Toyota have been talking about the stock sale for months
• A Deutsche Securities Analyst in Tokyo said the benefits for Toyota were unclear
• Access to Fuji’s plants in Japan could boost Toyota’s productivity
• Fuji Heavy only has one North American plant
• Toyota is paying 520 yen ($4.60) a share for approx. 68 million Fuji shares
• Fuji closed at 540 yen ($4.70) on Wednesday before the deal was announced
• GM’s remaining stake in Fuji is valued at $418 million

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Tagged: , Auto Manufacturers - Major
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