Ford Motor Co. (F) and its strategic partner, Japan's Mazda Motor Corp, declared that the former has reduced its stake in the latter from 11% to 3.5%. Ford would get ¥31 billion ($372 million) by selling its stake in the company.
With the stake sale, Ford would no longer be the largest shareholder of Mazda and Chase Manhattan Bank would take up as the top shareholder of the company with a 7% stake.
Ford has already concluded talks with 10 potential buyers. The buyers included Tokyo-based trading conglomerate Itochu Corp., Sumitomo Mitsui Banking Corp. – Mazda's main lender, and other business partners such as trading house Sumitomo Corp.
The partnership between Ford and Mazda began in 1979. Through the partnership, Ford intended to develop small and fuel-efficient cars using Mazda's technology while Mazda depended on Ford for funds to support its research and development activities.
However, Ford's ties with Mazda had started to weaken from 2008 with its reduction of 33.4% stake in the latter to 13% and later to 11% in order to raise cash during the global economic crunch last year.
Consequently, Mazda sought Toyota Motor Corp.'s (TM) help in March this year to obtain key components of hybrid systems – batteries, motors, control units and other electronic parts – from the latter, through a hybrid technology tie-up.
In addition, the sale undoubtedly reveals Ford's intentions to focus on its own brands. Apart from the namesake brand, Ford is currently left with Lincoln and Mercury brands after shedding its luxury lineups – Jaguar, Land Rover, Aston Martin and Volvo.
By the end of this year, the Mercury line-up will also be phased out at the cost of its Lincoln line-up. The company plans to launch as many as seven new Lincoln vehicles in the next four years, including a small car in 2014.
In spite of the reduced stake, Ford and Mazda have revealed that they will continue with their business partnership. They share same engineering platforms and have joint production facilities in Asia. They are also pursuing expansion plans in these facilities, which are supposed to take their strategic partnership to the next level.
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