TOKYO – Cash-strapped General Motors Corp. (GM) is selling the shares it holds in truckmaker Isuzu to two Japanese trading companies and a bank for about $300 million to fund its turnaround in North America, the U.S. automaker said Tuesday.
Disposing of the Isuzu stake marks the latest retreat for a company besieged by staggering losses, labor problems and mounting competition from Asian automakers. The move also highlights GM's rapid pullout from Japanese partnerships it has built since the 1970s.
GM said last month that it was selling the 7.9 percent stake it held in Isuzu Motors Ltd., or about 90 million shares, but will keep its business partnership with Isuzu, such as joint development and manufacturing of trucks and diesel engines.
Previously, the Detroit-based automaker had been the top stakeholder in Isuzu.
Mitsubishi Corp., which has a joint venture with Isuzu to make and sell trucks in Thailand, is purchasing 40 million shares at 16 billion yen ($135 million), raising its stake in Isuzu from 0.2 percent to 3.7 percent.
Itochu Corp., which has a partnership with both GM and Isuzu, is also purchasing 40 million shares at 16 billion yen ($135 million), raising its stake to 4.2 percent, and Mizuho Corporate Bank, which works as Isuzu's main bank, is acquiring 10 million shares for 4 billion yen ($34 million), the companies said.
GM Chief Executive Rick Wagoner said the sale was needed to strengthen GM's balance sheet during the revival effort and would not end the alliance with Isuzu.
"Our relationship is strong and getting stronger, and we look forward to our continued partnership," he said in a statement.
Shinji Kitayama, auto analyst with Shinko Securities Co. in Tokyo, said the shares were going to businesses that already had ties with Isuzu, and made sense.
Earlier this month, GM sold 17 percent of Suzuki Motor Corp. for about $2 billion, leaving it with a 3 percent stake. That followed last year's sale of GM's entire 20 percent stake in Fuji Heavy Industries, the maker of Subaru cars.
The GM-Isuzu partnership covers the development, manufacturing and distribution of pickup trucks in Asia, Latin America, Africa and the Middle East. They make diesel engines for cars in Europe and pickups in the United States.
GM acquired a 34 percent stake in Isuzu in 1971, and raised that to 49 percent in 1998. In 2002, GM lowered its stake to 12 percent, and to 7.9 percent last year.
Isuzu's shares, which have doubled in recent months compared to a year ago, rose 2.6 percent in Tokyo trading to 440 yen ($4). Isuzu and General Motors made their announcement after trading ended in Tokyo.
General Motors, the world's largest automaker which lost $10.6 billion last year and plans to close 12 facilities in North America by 2008, also said earlier this month that it's selling a 51 percent stake in its finance arm in a deal expected to generate $14 billion.