Will retain 3 percent, continue strategic alliance
DETROIT, March 6 /PRNewswire/ -- General Motors Corp. (NYSE: GM) today
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.
General Motors Corp. (NYSE: GM), the world's largest automaker, has been
the global industry sales leader for 75 years. Founded in 1908, GM today
employs about 327,000 people around the world. With global headquarters in
Detroit, GM manufactures its cars and trucks in 33 countries. In 2005, more
than 9 million GM cars and trucks were sold globally under the following
brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel,
Pontiac, Saab, Saturn and Vauxhall. GM operates one of the world's leading
finance companies, GMAC Financial Services, which offers automotive,
residential and commercial financing and insurance. More information on GM
can be found at www.gm.com.
SOURCE General Motors Corp.
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-0- Mar/06/2006 9:00 GMT
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