Saturday, June 28, 2008

Toyota increases its stake in Fuji Heavy Industries Ltd.

Toyota Motor Corporation (TYO: 7203) is going to raise its stake in Fuji Heavy Industries Ltd.(TYO:7270), the maker of Subaru cars. After the deal is completed, Toyota Motor will be the largest stake holder in Fuji Heavy Industries Ltd. Earlier, GM (NYSE:GM) was the largest stake holder of the company but in a move to collect cash for restructuring, the company sold its portion in 2005. Currently, Toyota Motor Corporation holds 9.5% stake. After this deal, Toyota’s stake will rise to 16.61% (nearly 17%). Toyota is going to pay $293 million for 61 million shares of Fuji Heavy.

Amidst global economic crisis and rising oil price, mergers like this have become a common move among the automakers to decrease the cost of research and development. Toyota has joined with Subaru to develop hybrid cars in which, Toyota is currently one of the market leaders.

In 2005, GM sold its 20% stake in Subaru followed by Suzuki Motor Corporation (TYO:7269) and Isuzu Motors Limited (TYO:7202) in 2006. Toyota also bought shares of Isuzu Motors Limited. The deal between Toyota and Fuji is expected to be finished on July 14.

Related articles:
International Herald Tribune