See What a Buck Will Buy - Isuzu Sells Entire Stake In US JV For $1

TOKYO December 20,2002; Dow Jones reports that Isuzu Motors Ltd. will sell its entire 49% stake in a car-making joint venture in the U.S. to Fuji Heavy Industries Ltd. for US $1, the companies said Friday.

Isuzu and Fuji Heavy originally agreed on Isuzu's withdrawal from Subaru-Isuzu Automotive Inc. in October. Subaru-Isuzu Automotive makes cars for Isuzu and Fuji Heavy.

In line with their original plan, Isuzu will compensate Fuji Heavy for losses the joint venture is expected to incur as Isuzu's withdrawal will leave excess capacity at the U.S. plant.

The struggling truckmaker will inject an additional US$394 million into the joint venture's capital before Fuji Heavy buys Isuzu's stake and the company becomes a full Fuji Heavy unit on January 1, the companies said. The company will be renamed Subaru of Indiana Automotive Inc. on January 1.

The price which Fuji Heavy will pay for Isuzu's stake also takes into consideration the US$489.5-million cost Isuzu will shoulder, as well as Isuzu's portion of the joint venture's assets, the companies said.

Isuzu is currently carrying out broad-based restructuring, including a withdrawal from non-core operations such as sports utility vehicle production in the U.S. Isuzu was losing money in the U.S. as the gap between its sales and supply widened.