Daimler Buys 43% Of Mitsubishi's Fuso Truck Business

TOKYO, Sept 19, 2002 Reuters is reporting that DaimlerChrysler and Mitsubishi Motors Corp will announce on Friday an agreement for Daimler to take a 43 percent stake in Mitsubishi's Fuso truck business, the daily Yomiuri Shimbun said.

The move would be part of a reorganisation already signalled by the companies in which Japan's fourth-largest automaker, 37 percent owned by DaimlerChrysler, would split off the division into a separate company.

Mitsubishi will have a 42 percent stake in the truck business, while several other Mitsubishi group firms will control the remaining 15 percent, the Yomiuri's Thursday report said.

The total investment by German-U.S. auto giant Daimler and the Mitsubishi group firms in Mitsubishi's battered but valuable truck business will be around 110 billion yen ($905.6 million), the paper said.

About 10 billion yen will go towards the new firm's capital. Of the rest, around 60 percent would go towards Mitsubishi Motors' capital reserves and 40 percent towards the new company's capital reserves, it said.

Mitsubishi declined to confirm the report.

"We are still in the final stages of talks and the details have yet to be finalised," Mitsubishi Motors spokesman Toru Kawahata said.

Mitsubishi's stock had risen 5.6 percent to 283 yen by midday, which compares with a year high of 444 in early April and a low of 216 in mid-January.

The broader market also rose, boosted by a plan by the central bank to buy shares directly from Japanese banks. The Nikkei average closed the morning session up 3.37 percent.

Analysts say splitting off the truck division would give DaimlerChrysler stronger control of the best part of Mitsubishi.

But they had worried that some investors in Mitsubishi could lose out with the splitting off of the division -- widely considered the jewel in its crown despite being battered by a decade-long slump in domestic truck demand.

Executives at the truck division have also argued that separating it would result in better allocation of resources.

The newspaper said Wilfried Porth, responsible for management personnel development at Daimler, would become head of the new truck entity, to be known as Mitsubishi Fuso Truck/Bus in Japanese.

Mitsubishi has for years been considering splitting off its truck unit, with initial plans laid during an earlier tie-up with Swedish truckmaker Volvo AB.

Those plans were delayed after DaimlerChrysler took a controlling stake in Mitsubishi in March 2000 and Volvo withdrew from its alliance with the Japanese truckmaker.

Mitsubishi and Hino Motors Ltd, a unit of Toyota Motor Corp, are regarded as the stronger two of Japan's four truckmakers, although all have been hurt by the long-term decline in sales.