Toyota Motor Corp. will buy an 8.7 percent stake in Fuji Heavy Industries Ltd., the maker of Subaru vehicles, from General Motors Corp., the three automakers said Wednesday.
Under the agreement, GM, which currently holds a 20.1 percent stake in Fuji Heavy, will sell 68 million shares to Toyota, the world's second-largest carmaker, for 35.4 billion yen, making Toyota the top shareholder in Fuji Heavy.
GM, the world's largest carmaker, will sell the remaining 89 million shares, or 11.4 percent, to Fuji Heavy with the price determined in the marketplace, the companies said.
"We expect that the alliance with Toyota, which is one of the world's best companies, will help our company grow in the future," Fuji Heavy President Kyoji Takenaka told a joint news conference with Toyota in Tokyo.
Toyota Executive Vice President Mitsuo Kinoshita meanwhile said the tieup with Fuji Heavy will be particularly beneficial to Toyota in product development and manufacturing.
"Fuji Heavy has high technical skills and we hope to make good use of their technologies for our products," Kinoshita said.
Observers speculate the deal is aimed in part at helping out GM, which is struggling with falling sales in North America. Toyota denied this was the case.
The two companies said that by limiting Toyota's stake in Fuji Heavy below 10 percent, they can cooperate while respecting each other's independence in management.
Toyota and Fuji Heavy said they will start studying possible joint projects in the development and production areas.
Fuji Heavy's Takenaka said one possibility is letting Toyota use his carmaker's plant in Indiana.
Toyota's plants in North America are running at nearly full capacity thanks to its thriving sales there.
The Fuji Heavy plant, where the Legacy and the B9 Tribecca are produced, has an annual production capacity of 200,000 vehicles but is currently running well below that at about 130,000, company officials said.
Analysts said the agreement will benefit all three automakers.
"Fuji Heavy's product lineups and those of Toyota do not overlap," and it is a really good buy for Toyota, said Yasuhiro Matsumoto, a credit analyst at BNP Paribas Securities – Ltd.
Fuji Heavy can reduce its research and development and manufacturing costs by working with Toyota, while GM will be able to pull out of an alliance that is no longer benefiting either GM or Fuji Heavy, Matsumoto said.
The American auto giant and Fuji Heavy have both been struggling with high cost structures and sliding car sales, and there wasn’t much synergy in the alliance.
“We’ve had a good partnership. However both GM and Fuji Heavy came to the conclusion that there were not enough collaborative projects to sustain the alliance and that each of our interests could be better served through a different approach,” Troy Clarke, GM group vice president, said in a statement.