Mazda buys back chunk of own shares from Ford

[November 19, 2008]  TOKYO (AP) -- Mazda spent 17.8 billion yen ($184 million) to buy back 6.8 percent of its own shares from cash-hungry Ford Motor Co., the Japanese automaker said Wednesday. Several other companies bought smaller stakes.

The move came a day after Ford said it's slashing its stake in Mazda from an earlier 33.4 percent to 13.8 percent. That would still make Ford the top shareholder in Mazda, with which it has had a partnership for nearly 30 years.

In a shuffle at the top of Mazda, Hisakazu Imaki stepped down Tuesday as president and chief executive to become chairman. The number of Ford representatives on Mazda's seven-member board was cut to one from three.

The sale would give Ford 52 billion yen ($540 million) based on Mazda's closing stock price Tuesday of 184 yen, or $1.90 -- barely a quarter of what it was worth one year ago.

The move comes amid growing losses at America's major automakers, which are pleading with Washington for an emergency $25 billion bailout loan from the U.S. government to get through the economic slump.

On Monday, GM said it would sell its remaining 3.02 percent stake in Japan's Suzuki Motor Corp. for 22.37 billion yen ($230 million).

Mazda Motor Corp., which makes the RX-8 sports car and Miata roadster, bought 96.8 million shares at 184 yen ($1.90) a share, the Hiroshima-based company said. The shares rose in morning trading but then dipped 1 percent Wednesday to 182 yen.

Major trading house Sumitomo Corp. said it bought 0.5 percent of Mazda, or 7.1 million shares, at 184 yen a share, for a total of about 1.3 billion yen ($13 million) on Wednesday. Hiroshima Bank said it spent about 2.6 billion yen ($26 million) for 14.2 million shares. The Chugoku Electric Power Co. said it bought 0.33 percent of Mazda, or 4.73 million shares.

The Nikkei, Japan's top business daily, said about 30 companies that do business with Mazda were expected to buy shares, including major electronics maker Panasonic Corp. and auto-parts maker Denso Corp. Panasonic and Denso declined comment.

Ford, based in Dearborn, Michigan, racked up losses of $8.7 billion in the second quarter, its worst result ever, and has used up $11 billion of a cash stockpile in the past year.

Ford formed a capital alliance with Mazda in 1979, taking a 25 percent stake. That was raised to 33.4 percent in 1996 -- a controlling share in Japan. Over the last decade, Ford helped engineer a turnaround at once-struggling Mazda, sending executives and sharing technology and auto parts to cut costs.

Ford and Mazda have said they will maintain their strategic relationship. Mazda's overseas plants in the U.S., China and Thailand are joint operations with Ford. But Mazda in the future will likely be less able to count on Ford's support, including money and management personnel.

Mazda is still a small player compared to Japanese giants like Toyota Motor Corp. and Honda Motor Co., and may need to court tie-ups with automakers other than Ford if it hopes to survive tough times.

Executive Vice President Philip Spender, who has overseen research, cost cuts and marketing, remains the sole Ford executive on Mazda's board.

CEO Imaki, who is stepping down, was a top figure in the Mazda-Ford partnership and the first Japanese to head Mazda under its Ford alliance, following several executives sent in by Ford.

The change had been initially planned for April next year but was sped up so that Yamanouchi can spearhead adaptations at Mazda to accomodate its new relationship with Ford, according to Mazda.

Takashi Yamanouchi, previously in charge of purchasing, human resources and auditing, will succeed Imaki as president and chief executive. Yamanouchi faces an enormous challenge in leading Mazda amid a slumps in the key U.S., European and Japanese auto markets. The declines appear to be gradually trickling down to emerging markets as well.

Although Japanese automakers have also been hit by the global slump, especially the slowdown in the key U.S. auto market, they have fared relatively better than their U.S. rivals because of their reputation for making smaller, fuel-efficient models.

Mazda said it expects net profit to fall to 50 billion yen ($518 million) for the fiscal year ending March 2009.

[Associated Press; By YURI KAGEYAMA]

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