Toyota Motor Corp., GM's biggest competitor, would buy 8.7% of Fuji Heavy Industries Ltd. for about $315 million in cash. GM would sell the remainder of its 20% stake in Fuji Heavy, worth about $422 million, back to Fuji or on the stock market.
GM is raising cash after posting $1.4 billion in losses in the first half and losing its investment grade rating in May. GM's largest supplier and former subsidiary, Delphi Corp., is asking GM for financial help to stave off a bankruptcy filing. GM faces further losses as U.S. consumers continue to boost purchases from Toyota and other Asian automakers.
"It's a matter of focus," said Alan Baum, director of automotive forecasting at Planning Edge, a consulting firm in Birmingham, Mich. For GM, Fuji "is a nice to have, but not a must have."
GM said it would restate second-quarter earnings to reflect a reduction of $700 million to $800 million in the value of its holdings in Fuji Heavy. Detroit-based GM lost $286 million in the period. It expects the sale to be completed in the fourth quarter.
A stake in Fuji Heavy would give Toyota access to Fuji's technology for batteries that could be used in hybrid gasoline-electric cars.
Hybrids such as Toyota's Prius and Honda Motor Co.'s Civic are equipped with nickel hydride batteries made by Panasonic EV Energy Co. Fuji Heavy Chief Executive Kyoji Takenaka has said his firm's manganese lithium-ion batteries last longer than Panasonic's batteries and handle temperature extremes better.
GM shares fell $1.45 to $28.64.