DaimlerChrysler Quits
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Daimler Chrysler to Quit Mitsubishi Motors
Mitsubishi Heavy Industries, Mitsubishi Corp, Bank of Tokyo-Mitsubishi to Continue
April 22, 2004. Reuters reported that Daimler Chrysler has decided to pull out of Mitsubishi Motors' restructuring plan and said that it will not provide any more financial assitance to the troubled car maker. Apparently, DaimlerChrysler could not come to an acceptable deal with Mitsubishi group. Currently Daimler holds 37% of MMC and is going to treat it as a discontinued business until a buyer can be found, according to company's spokesperson.
Seems like the board finally revolted against its CEO Juergen Schrempp, who had bought stakes in MMC and Chrysler to build on his strategy to become a global manufacturer. This decision is bound to have repercussions on Chrysler too which is linked to Mitsubishi Motors quite deeply.
Bloomberg informs that the major companies in the Mitsubishi group, Mitsubishi Heavy Industries, trading arm Mitsubishi Corporation and Bank of Tokyo-Mitsubishi, are going "do their best" to revive MMC. Mitsubishi Heavy Industries, Japan's largest heavy machinery maker, formed by the merger of Mitsubishi Aircraft and Mitsubishi Shipbuilding in 1934 and manufacturer of Mitsubishi A6M Type 0 fighter, commonly known as Mitsubishi Zero, widely used in World War 2, owns 15% of the troubled automaker. Mitsubishi Motors was spun off from it in 1970. Mitsubishi Corp, Japan's biggest trading company, owns 5.2 of Mitsubishi Motors. Bank of Tokyo-Mitsubishi is Japan's biggest lender by market value and owns 3% of MMC.
Standard and Poors immediately decided to lower its ratings on MMC three notches to CCC-, which is nine levels below investment grade and just 3 notches above default.
July 2, 2004. [Financial Times] DaimlerChrysler is set to reclassify its investment in Mitsubishi Motors (MMC) as "non-strategic and available for sale" later this year. Kurt Sanger, analyst at ING, said that as well as clearing the way for an eventual sale, the dilution of DaimlerChrysler's stake to less than 20 per cent would enable it to treat its share of MMC's forecast net loss of Y230bn for the year to March 2005 as a balance sheet item, removing it from its profit and loss account. It is understood negotiations are under way to dissolve a range of "alliance projects" in transmissions and engines that had not yet been announced publicly.
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