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Ford to Sell Mazda?

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On: Sun, Oct 17, 2010 at 11:28AM | By: Sherry Christiansen

Ford to Sell Mazda?

Ford Motor Company is the top stake holder in Mazda Corporation with 11% ownership. Nikkei Business Daily reported that the company plans to reduce its majority stake in Mazda Motor corporation selling all but 3% of its interest to other companies that have business associations with Mazda.

Ford called the report “speculation” in a statement.  "Ford's ownership stake in Mazda remains unchanged," the statement said. "Ford continues to have a close strategic relationship with Mazda and we cooperate in areas of mutual benefit. We have no further comment on the speculation." The business daily states that Mazda asked Sumitomo Mitsui Banking Corporation and other firms to buy shares from Ford. Ford’s shares amounted to195 million Mazda shares, worth around 42 billion yen ($515.6 million), as of today, the Nikkei said.

Sumitomo Mitsui Financial Group Inc already owns 2.9 % of Mazda’s shares, according to Automotive News.com, so if there is an acquisition, the Mitsui Group would most likely end up being the majority share holder for Mazda Corporation. Ford purchased 25% of Mazda’s shares in 1979 and then raised its stake to 33.4% in 1996 which gave Ford priority shareholder. Mazda joined Ford's car making venture with Changan in 2006 , which now makes Mazda 2 and Mazda3 compact cars as well as Ford's Focus, Fiesta, Mondeo, S-MAX, Volvo S40 and S80 models. The news report states that “the weaker capital ties after the upcoming share sale are expected to lead to a gradual winding down of business cooperation between the two automakers.”

"We have a good relationship with both our partners and there is no plan currently to dissolve the joint venture," a Mazda spokeswoman told Reuters.

Mazda's ties with Ford are not as strong since the U.S. automaker reduced its controlling stake in Mazda to 13 percent in 2008 to free up cash. Ford currently owns about 11 percent of Mazda. Auto industry partnerships have been in focus in recent weeks, with Suzuki Motors and Volkswagen AG announcing an equity tie-up and Mitsubishi Motors and France's Peugeot in talks to deepen their ties to ride out the industry's worst ever slump.

Despite the denial by all three partners, a pullout of Mazda could actually be positive for the Japanese automaker, which has just a 15% stake in the venture according to analysts.

"The move will be positive for Mazda (if true). Mazda sells very well in China, but the problem is that the maker can't decide anything in China by itself as it has a minority stake in the joint venture," said Koji Endo, auto analyst with Advanced Research Japan.

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