Looks like GM has also wizened up.
GM averaged to burn about $1.03 billion per month in the 2nd Q of this year and $2.3 billion per month in the 3rd Q of this year. The GM-Suzuki partnership dates from 1981 but links loosened after GM sold a 17 percent stake in Suzuki in 2006, leaving it with three percent.
GM has announced it will sell its entire 3.02% ($230 million) stake, about 16.4 million shares, back to Suzuki. Suzuki will pay $14.04 a share, the same price its shares closed at on Monday in Tokyo. With the buyback, Suzuki now owns about 20% of its own outstanding shares, Kyodo news agency reported.
GM has also said that the $230 million is only three to seven days’ worth of cash, but by selling its stake in Suzuki, GM would save more money by delaying for two weeks incentive payments to its dealers. Dealers were notified of the change in an email Monday.
Suzuki will finance the acquisition from its cash reserves, the Nikkei newspaper reported today, citing a company statement.
Suzuki Chairman Osamu Suzuki said in a statement Monday that the Japanese automaker and GM will continue to collaborate on projects currently underway. “There will be no impact on Suzuki’s current business plan,” Suzuki, Chairman and CEO, Suzuki Motor Corp. said in a statement yesterday, indicating that they [GM and Suzuki] will cooperate to jointly develop environmentally friendly cars.
“As GM taking this particular step to sell the shares it owns as a step toward strengthening its balance sheet is very understandable, we wanted to support GM’s decision,” Suzuki had said.
With this stock sale, GM now owns no stake in any Japanese automaker as it already sold its entire stake in Isuzu Motors Ltd. and Fuji Heavy Industries Ltd. in recent years amid deteriorating earnings.
In 1981, Suzuki and GM entered a capital tie-up when GM acquired a 5.3% stake in the Japanese car-maker. The stake was bolstered to 20% in 2000 but in 2006, GM reduced its stake in Suzuki to 3% as part of its restructuring program.
If you missed it, GM distributed a propaganda video on YouTube making the case that a $25-billion bailout now would be far less costly to the nation than allowing the industry to fail.