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GM Makes it Official – Sells Equity Stake in Suzuki Motor Corp
General Motors announces the sale of its remaining equity in Suzuki Motor Corporation in a press release issued this morning.
Move will generate enough for 3 days for cash-strapped automaker
In a press release confirming an announcement made earlier today, GM stated that it would be selling its remaining 3 percent equity in Suzuki Motors for $230 million.
Automakers Maintain Other Business Relationships
Detroit – General Motors Corp. announced today it would sell its remaining equity stake in Suzuki Motor Corp. but based on a mutual agreement would continue the implementation and expansion of its business relationships with the company.
GM plans to sell 16,413,000 Suzuki shares, which is equal to 3 percent of Suzuki’s total issued common stock, on the open market. Based on today’s market price, the shares are worth approximately $230 million.
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. In 2006, GM sold a 17.4 percent stake in Suzuki.
Suzuki and GM will continue promoting and implementing their existing projects, including development and collaboration on advanced technologies such as hybrids and fuel cells; joint operation of their CAMI vehicle manufacturing joint venture in Canada; collaboration on the development of powertrains; the cross-supply of OEM vehicles; joint global purchasing activities; and collaboration on entries in new emerging markets.
“We highly value our strategic relationship with Suzuki,” said Rick Wagoner, GM chairman and chief executive officer. “Despite the sale of our remaining Suzuki shares, this action will have no impact on our existing bilateral business relationships. We look forward to continue building on our success to date with our long-term partner.”
Suzuki and GM also agreed that they would discuss the repurchase of Suzuki shares by GM, should GM express its desire to do so at a future date.
The Bottom Line
While those of us at Auto Credit Express can certainly see the need to raise cash, the $230 million is only a drop in the bucket when it comes to the needs of the auto giant. From June 30th through September 30th, the automaker burned through $6.9 billion – that amounts to $2.3 billion per month or, in round figures, about $80 million dollars per day. At that rate, the $230 million from Suzuki will be gone in only 3 days.
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