Suzuki to buy back GM's 3% stake for $230 mil.+

TOKYO, Nov. 17 Kyodo - Suzuki Motor Corp. said Monday it has agreed to buy back General Motors Corp.'s 3.02 percent stake in the Japanese automaker for 22.37 billion yen ($230 million) as the struggling U.S. auto giant is seeking to raise cash.

With the sale, GM, which used to own shares in Isuzu Motors Ltd. and Fuji Heavy
Industries Ltd. in addition to Suzuki, will bring to an end all of its
investments in Japanese automakers.
GM will sell the whole stake, equivalent to 16.41 million shares, on the stock
market Tuesday and the Shizuoka Prefecture-based automaker will buy back all of
the shares the same day, Suzuki said.
Suzuki's purchase, to be made through the Tokyo Stock Exchange's ToSTNeT-2
system for purchasing treasury stock, will be implemented at 1,363 yen per
share, the closing quote for Suzuki stock on the TSE's First Section on Monday,
it said.
Suzuki Chairman and Chief Executive Officer Osamu Suzuki said in a statement
that the automaker decided to agree to GM's request because it ''fully
understands GM's need to raise cash.''
Suzuki said he agreed in a telephone conversation with GM Chairman Rick Wagoner
that the two automakers will continue a range of joint projects they have been
implementing.
Suzuki said he and Wagoner confirmed ''that all individual initiatives will be
pursued as they are today.''
A Suzuki official said that ''all individual initiatives'' that the automaker's
chairman referred to include joint development of hybrid vehicles and fuel
cells as well as development of power trains.
The Japanese automaker said the planned sale by GM of the Suzuki shares has
been approved by the carmakers' respective boards.
In 1981, Suzuki and GM entered into a capital tie-up when GM acquired a 5.3
percent stake in the Japanese carmaker known for its compact cars. The stake
was bolstered to 20 percent in 2000 but in 2006, GM reduced its stake in Suzuki
to 3 percent as part of its restructuring program.
GM used to have a large stake in Isuzu and Fuji Heavy as well but the U.S.
automaker pulled itself out of its alliance with Fuji Heavy in 2005 and ended
its capital tie-up with Isuzu in 2006 as its earnings performance deteriorated.
On Nov. 7, GM said in a statement that it had suffered a net loss of $2,542
million (250 billion yen) in the July-September quarter, attributing the poor
performance to the impact of the ''unprecedented economic and credit market
turmoil.''
Major U.S. automakers including GM and Ford Motor Co. have reported huge net
losses, prompting President-elect Barack Obama to pledge to do all he can to
turn around the ailing U.S. auto industry.
Obama, in his first media appearance in Chicago since the presidential
election, said the auto industry's hardship ''goes far beyond individual auto
companies to the countless suppliers, small businesses and communities
throughout our nation who depend on a vibrant American auto industry.''
Wagoner said in the Nov. 7 statement, ''Consumer spending, which represents
close to 70 percent of the U.S. economy, fell dramatically, and the abrupt
closure of credit markets created a downward spiral in vehicle sales.''
U.S. congressional efforts to enact legislation to reinvigorate the automakers
will shift to top gear in the coming months, industry watchers said.
==Kyodo