GM Will Sell Isuzu Shares

TOKYO March 29, 2006; Chisaki Watanabe writing for the AP reported that General Motors Corp., the world's biggest automaker, wants to sell its stake in Isuzu Motors Ltd., and the companies said Thursday they are studying the proposal.

The announcement came after two Japanese trading houses and a bank said they were approached by the American automaker about buying its 7.9 percent stake in the Tokyo-based truckmaker.

GM holds about 90 million Isuzu shares, with the stake valued at about 38 billion yen ($320 million), Isuzu spokesman Naruhito Furuta said.

"Isuzu is aware that GM is in an important phase of going back into the black in its North American operations and reviewing its investment portfolio, and needs to strengthen its balance sheet and liquidity," Isuzu said in a statement.

The companies plan a formal announcement about a sale after a decision is reached, Isuzu said in a statement. Until then, they will continue cooperating on truck production, Isuzu said.

GM has asked three Japanese companies, Mitsubishi Corp., Itochu Corp. and Mizuho Corporate Bank Ltd., whether they would like to buy its stake and they are considering the offer, spokesmen from the three companies said. No decisions have yet been made, they added.

A sale would follow a similar divestment earlier this month from Japan's Suzuki Motor Corp.

In a separate statement, GM confirmed it was discussing a possible sale in a "private transaction."

"There can be no assurance that any transaction will result from these discussions and it would, therefore, be inappropriate to comment further," GM said.

GM has been hit with U.S. market share losses, largely due to Asian competition, and has outlined a plan to cut 30,000 jobs and close 12 facilities in North America by 2008. It has been looking to sell assets as a way to raise desperately needed cash.

GM sold 17 percent of the 20 percent stake it had in Suzuki Motor Corp., mostly to Suzuki, for about $2 billion earlier this month. At the time, GM said there were no plans to change its stake in Isuzu.

Itochu spokesman Masahide Kitagawa said GM contacted the trading company earlier this month about a possible sale of its stake and that Itochu is considering the purchase "positively." He said that nothing has been formally decided.

Mitsubishi spokesman Eiji Hashimoto also said his company was considering a purchase, but that no decision has been made.

Mizuho spokesman Misao Yoneyama said the bank is also considering buying a stake.

Mitsubishi already owns a 0.2 percent stake in Isuzu, while Itochu has 0.7 percent and Mizuho has 2.8 percent, according to Isuzu spokesman Naoki Ariizumi.