Ford’s garage sale
Ford first bought into Mazda in 1979, and increased its stake in the Japanese automaker to 33.4 percent, enough to achieve control under Japanese law, in 1996. (For comparison: Renault owns 44.4 percent of Nissan. Then again, Nissan owns 15 percent of Renault.) There was speculation early this year that Ford, strapped for cash, would unload both Mazda and Volvo, its last remaining “foreign” holdings; inasmuch as Ford depends on both for platform development, it seemed unlikely to me that they’d sell either.
If not the other shoe, certainly a sock has dropped: Ford is selling about two-thirds of its equity in Mazda for $540 million, leaving Dearborn with a 13-percent share. This sale being 20 percent of total Mazda shares, you could conclude that Mazda’s market cap is $2.7 billion — which, at the moment, is about 50 percent higher than that of General Motors.
From the press release:
Ford Motor Company said it will sell a portion of its ownership stake in Mazda Motor Corp., and the two companies will continue their successful strategic relationship. The ratio of Ford’s ownership of Mazda stock has been reduced from 33.4 percent to just over 13 percent.
The action is in line with Ford’s plan to strengthen its balance sheet and ensure it has the resources to fund its product-led transformation plan focusing on the Ford brand worldwide.
Under the new agreement, Ford and Mazda will continue their ongoing joint ventures, as well as the sharing of platforms and powertrains. Ford and Mazda’s nearly 30-year relationship has been and continues to be an effective way to utilize the resources of both organizations and maximize joint synergies.
The divestiture of Ford’s shares in Mazda will be accomplished both through the sale of shares to Mazda and the sale of shares to a group of Mazda’s strategic business partners.
Two of the three Ford directors on the Mazda board will step down as part of the deal. Not stepping down, regrettably, is the PR flack who baked verbiage like “maximize joint synergies” into the press release.
This is a bigger deal than GM’s selloff of its 3 percent of Suzuki for, to quote a Fark submitter, “three packs of gum, some pocket lint, and a Scooby-Doo Pez dispenser.” GM had once held 20 percent of Suzuki, but sold off most of its shares in 2006.
John Salmon »
19 November 2008 · 2:15 pm
That $540 million will pay Ford’s bills for about two weks. Ford thus won’t go belly-up before Dec. 3 or so.