Renault To Buy Majority Stake Of Colombia Car Co.

BOGOTA December 6,2002; Dan Molinski wrting for Dow Jones reported that French car maker Renault will take controlling interest in Colombian vehicle manufacturer Sofasa SA as of March 1, 2003, according to a memorandum of understanding signed Friday, Sofasa said in a statement.

Under terms of the deal, local conglomerate Valores Bavaria will sell its 51% stake in Sofasa to current minority shareholders Renault and Japan's Toyota Motor Corp. and Mitsui & Co. Ltd.

The sale will take place before March 1. Renault's share will jump from 24% to 60%, Toyota's from 18% to 28% and Mitsui's from 8% to 12.%.

A price tag wasn't mentioned in the statement.

"Through this, the three companies affirm their will to strengthen, over a long period, their industrial and commercial cooperation with Colombia, as well as their long-term permanence in the country," the Sofasa statement said.

Sofasa, the leading Colombian vehicle producer, makes cars for Renault and Toyota. It reported nine-month profits of 15.5 billion pesos ($1=COP2800), down from COP35.9 billion in that period last year.

The company exports some 60% of what it makes to neighboring Ecuador and Venezuela.

Despite the company's dip in profits, car sales in Colombia have been spectacular this year.

Through October, Colombian automobile suppliers sold 74,733 units wholesale, a 42% increase from the 52,492 units sold in that period of 2001, according to industry data.

The selling shareholder, Valores Bavaria, has a stake in some 100 local companies and counts as its main holding Avianca, the country's flagship airline. Avianca recently merged operations with No. 2 carrier Aces to create Alianza Summa.

The conglomerate also holds a 34% stake in BellSouth's (BLS) local cellular unit.

The planned sale of Sofasa is the latest in a series of divestments by Valores Bavaria as the conglomerate gets rid of what it deems its non-strategic firms. Last year it sold its locally popular hamburger chain Presto to a group of private investors.