Toyota bought FHI stocks from GM...bye GM.

**Karding** · October 6th, 2005 04:59 AM

Whats next? Turbo-Synergy Hybrid Engine? :bwahaha: This should be good for both TMC and FHI.

8.7% sold to Toyota, the remaining 11% which GM owns will be sold to the market.

October 5, 2005
Toyota Motor Corporation
Fuji Heavy Industries, Ltd.

Toyota and Fuji Heavy Industries to Agree on Business Collaboration - Toyota to Purchase Shares of Fuji Heavy Industries -

Tokyo - TOYOTA MOTOR CORPORATION (TMC) and FUJI HEAVY INDUSTRIES LTD. (FHI) announced today that they have signed a memorandum of understanding stating they will start studying the synergic effects of business collaboration. In the collaboration, the two companies seek to mutually utilize their management resources in the fields of research & development and production, and to supplement each other’s technological development. The two companies plan to set up a joint steering committee and to aim for reaching an agreement on concrete collaboration programs as soon as possible.

TMC and FHI initiated business ties in 2003, when they announced that FHI would feature TMC’s “G-BOOK” network information service as “Subaru G-BOOK” in Subaru-brand vehicles for the Japanese market. TMC and FHI have come to view that, while they respect each other’s independency in management, each side could prosper further by strengthening their business relationship, as global competition intensifies.

In order to develop its relationship with FHI, TMC decided today to purchase FHI shares as follows:

Contents of share purchase:
- Party TMC will purchase from: A General Motors Canadian subsidiary
- Number of shares TMC will purchase: 68,000,000 shares
- Ratio of shares to be owned by TMC: 8.7% of FHI’s issued shares
- Planned shares settlement day: October 12, 2005

Yomiuri Shimbun (JP newspaper) reports that:

* 8.7% FHI stock (68M shares) that GM will sell will be acquired by Toyota at 520yen/share. So total price is ~US$320M.

* The rest of the shares that GM holds (89M shares) will be sold on the market, upon which FHI plans to buy back shares as Treasury stock. As a result, Toyota should possess ~10% of FHI based on voting rights.

* Toyota and FHI will establish an investigative commission and will collaborate in the development and production realm.

* Its believed that Toyota will indirectly support GM to avoid any friction in the US.

* GM initiated the idea of the stock sale because of stagnating sales in North America.

* Subaru President: "We decided that it would be difficult to attain satisfactory results due to the difference in business cultures between GM and FHI.

* Toyota President on the reason behind the tie-up: "We will cooperate with development and production." "We want to make full use of FHI's high technology." "Supporting GM is not our objective"

GM Sells Entire Stake in Fuji Heavy to Toyota, Market (Update6)
2005-10-05 08:46 (New York)

(Adds value for the Fuji stake in the second paragraph.)

By Kae Inoue and Naoko Fujimura
Oct. 5 (Bloomberg) -- General Motors Corp. agreed to sell
its holdings in Fuji Heavy Industries Ltd. for about $740
million, or less than half their value on GM's books, as it
struggles with rising losses.
Toyota, GM's biggest competitor, will pay about $315
million in cash for 68 million shares, or 8.7 percent, of the
maker of Subaru-brand cars, GM said in a statement today. GM,
the world's biggest automaker, will sell 11.4 percent of Fuji
Heavy, worth about $422 million at today's closing share price,
on the market. The Fuji stake had been valued at $1.5 billion,
the automaker said.
GM is raising cash after posting $1.4 billion in losses in
the first half, losing its investment grade rating in May and as
its largest supplier, Delphi Corp., asks for help to stave off
bankruptcy. The company faces further losses as consumers opt
for vehicles from Toyota, whose market value is worth more than
GM, Ford Motor Co. and DaimlerChrysler AG combined.
``It's surprising how fast GM is selling off the family
silver,'' said Graeme Maxton, a director of the Economist
Intelligence Unit in Hong Kong. ``It rings alarm bells.''
GM owns 157 million shares, or about a 20 percent stake, in
Fuji Heavy. GM also owns a 20 percent stake in Suzuki Motor
Corp. and a 8.4 percent stake in Isuzu Motors Ltd. Both
companies declined to comment.
GM said it will restate second-quarter earnings to reflect
a reduction of between $700 million and $800 million in the
value of its holdings in Fuji Heavy. It expects the sale to be
completed in the fourth quarter.

Fuji's Technology

A stake in Fuji Heavy will give Toyota access to the
company's technology for batteries which can be used in hybrid
gasoline-electric cars. Toyota aims to boost production of
hybrids to 1 million by the early part of next decade. It sold
134,700 hybrids last year.
Toyota and Fuji Heavy plan to cooperate in ``vehicle
development and production'', Toyota Executive Vice President
Mitsuo Kino****a said. Toyota will use Fuji Heavy's ``various
advanced technologies,'' he said, declining to elaborate, adding
Toyota has no plans to increase its stake.
Hybrids such as Toyota's Prius and Honda's Civic are
equipped with nickel hydride batteries made by Panasonic EV
Energy Co. Fuji Heavy's Chief Executive Officer Kyoji Takenaka
has said his company's manganese lithium-ion batteries last
longer than Panasonic's nickel hydride batteries and handle
temperature extremes better.

Win-Win

``Toyota is not the kind of company that will buy shares
without a business purpose,'' said Atsushi Osa, who helps manage
$110 billion at Sumitomo Mitsui Asset Management Co. in Tokyo.
``It will gain from investing in Fuji Heavy if it gets
technology that it doesn't have such as Fuji Heavy's batteries
for hybrids and airplane technology.''
Tighter government restrictions on vehicle emissions and
higher fuel prices are boosting demand for hybrids. Toyota has
sold a record 106,978 hybrids in the U.S. so far this year, more
than the 2004 total for all carmakers.
``The alliance will be a win-win for Toyota and Fuji
Heavy,'' said Koji Endo, an analyst at Credit Suisse First
Boston in Tokyo. ``Toyota and Subaru buyers don't overlap, so
it's one of the best matches.''
Fuji Heavy said it will buy back about 90 million of its
shares on the market, paying as much as 57.6 billion yen and
hold them as treasury stock. It will buy its shares on the
market on Oct. 6, 7 and 11, it said in a statement. Toyota will
pay about 520 yen a share for its stake in Fuji Heavy.
Fuji Heavy said it will have a one-time charge of 5 billion
yen from canceling the development of a cross-over vehicle with
GM's Saab unit. Fuji Heavy lowered its earnings outlook for the
full year to a profit of 12 billion yen from an earlier forecast
of a 15 billion yen profit.

Not Enough Projects

``We've had a good partnership,'' said Troy Clarke,
president of GM Asia Pacific in a statement. ``There were not
enough collaborative projects to sustain the alliance.''
GM's shares have fallen 25 percent so far this year and
declined 3.1 percent to $30.08 yesterday in New York. Toyota's
shares have risen 26 percent so far this year and fell 0.9
percent today to 5,250 yen in Tokyo. Fuji Heavy's shares have
risen about 8 percent so far this year and gained 2.3 percent
today to 540 yen.
GM's largest parts supplier, Delphi, may declare bankruptcy
this week, the New York Times reported today. The parts maker is
asking GM, its former parent, for $6 billion in aid, people
familiar with the situation said earlier last week.
Fuji Heavy generates about 90 percent of sales from its
automobile business. The other 10 percent comes from Fuji
Heavy's aircraft, industrial machinery and other units. The
company, set up in 1917 as an aircraft maker, is expanding its
aerospace and aircraft business to supply parts for Boeing Co.'s
new 787 aircraft.

--With reporting by Jeff Green in Southfield, Michigan. Editor:
Okeson, Nol.

Story illustration: For a graph of Toyota's share performance,
see {7203 JP <Equity> GP <GO>}. For highlights of Toyota's
earnings for the last nine years, see
{7203 JP <Equity> CH2 <GO>}. For the top transportation news of
the day, click on {TOP TRN <GO>} or type {TRNT <GO>}.

To contact the reporter on this story:
Naoko Fujimura in Tokyo at (81)(3) 3201-7551 or
nfujimura*bloomberg.net

To contact the editor responsible for this story:
Eugene Tang at (81) 3 3201-2373 or
etang*bloomberg.net

Above postings derived from nasioc.com

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