Fuji Heavy Industries Ltd. (FHI), which makes the Subaru brand of vehicles, said on Friday it had decided to sell 61 million treasury stocks that it owns to bigger rival Toyota Motor Corp. for 31.11 billion yen ($291.1 million), in order to enhance the capital and business partnership between the two companies.
Toyota, already Fuji Heavy's top shareholder, will raise its stake in the company to 16.61 per cent from the current 9.50 per cent. The announcement comes after Toyota completed preliminary hearings with the Fair Trade Commission and an agreement was reached on April 10.
On 14 July Fuji Heavy will sell its shares at 510 yen each, or at a 10 per cent premium over the average closing price between 11 December 11 and 10 March. Toyota had announced its intention to raise its stake in Subaru earlier this year.
US automaker General Motors (GM) used to be the top shareholder in Fuji, but sold its entire 20-per cent stake in 2005 as part of its efforts to raise cash. Toyota, on track to surpass GM as the world's biggest automaker, bought an 8.7-per cent stake in Fuji for about $315 million to become the top shareholder. Two years back, it had picked up a significant stake in another former GM partner, Isuzu.
Fuji Heavy currently makes Camry models for Toyota at its US plant, and also sells Justy compact cars in Europe under an original equipment manufacturers (OEM) contract with Daihatsu Motor Co., another Toyota unit that makes mini cars.
Under the expanded alliance, Toyota and Fuji Heavy will jointly develop and market compact sports cars using Fuji's proprietary Boxer, or horizontally opposed engine, which is similar to Porsche AG's engine.
The two companies aim to release the new front-engine rear-drive sports car by the end of 2011 and make them at a new assembly line to be built at Fuji's Ota plant in Gunma prefecture.
Toyota will also supply its compact cars to Fuji under an OEM contract before the end of 2010.
Separately, Daihatsu will also supply its Coo mini vehicles to Fuji Heavy for sale in Japan under the OEM deal. Beginning from October this year, Fuji will procure some 6,000 Coo vehicles a year from Daihatsu.
The deal will also allow Fuji to stop making mini-cars and focus its resources on the non-mini car segment.
Subaru is named after the star cluster Pleiades; in Japanese the name is "Subaru", which roughly translated into English means, "to govern", "unite," or "gather together". The company logo is influenced by the star cluster. The large star in the logo represents Fuji Heavy Industries, and the five smaller stars represent the current five companies that are united under the FHI group.
In Japan, the company also goes by the name Mutsuraboshi ("Six Stars"), under which title it appears frequently in very old Japanese documents such as Kojiki and Man'y?sh? and literature such as Makura no S?shi.