In an effort to help its balance sheet, GM has announced it plans to sell 17.4 percent of its stake in Suzuki Motor Corp. back to the Japanese car maker, raising approximately $2 billion in much-needed cash. The sale would leave the company with a pre-1998 level of 3 percent in Suzuki.
The Detroit-based auto maker is said to have lost $8.6 billion in 2005 and is currently undergoing massive restructuring driven by the company’s board. It ends months of speculation about dismantling their equity relationship after GM unloaded its entire 20 percent stake in Japan’s Fuji Heavy industries Ltd. in 2005 to help raise money.
GM and Suzuki will continue to work together at the operational level, including joint production distribution, development of advanced power train technology, ownership of an assembly plant in Canada and Suzuki’s 11 percent equity participation in GM’s South Korean unit, GM Daewoo Automotive & Technology Company.
GM said it expected a pre-tax gain of U0 million to $750 million from the sale.