Ford abandons Mazda control with 20 percent stake sale

By Chang-Ran Kim, Asia autos correspondent

TOKYO (Reuters) - Ford Motor Co (F.N), scrambling for cash as the U.S.-based automakers struggle to stay alive, has agreed to sell about two-thirds of its stake in Japanese carmaker Mazda Motor Corp (7261.T) for around $538 million.

Ford, first took a stake in Mazda in 1979 and raised it to a controlling interest of 33.4 percent in 1996. It will remain Mazda's top shareholder at 13 percent after selling the shares to Mazda and to some Mazda business partners.

Mazda plans to buy back 6.87 percent of its own shares from Ford for up to 17.9 billion yen ($185 million), keeping them as treasury stock, it said. More than 20 undisclosed Mazda business partners will buy the remaining shares Ford is selling, Mazda said.

Reeling from slowing sales, Detroit's General Motors Corp (GM.N), Ford and Cerberus Capital Management LP's CBS.UL Chrysler LLC are desperately trying to raise cash to come through the worst economic crisis since the Great Depression. Executives from all three are expected to amplify their calls for a financial lifeline from the U.S. government at Congressional hearings beginning Tuesday.

Ford shares dipped to a 26-year low of $1.70 on Tuesday ahead of the Congressional testimony before recovering to $1.73, up 1 cent or 0.6 percent.

As part of the ownership change, Mazda said two board members -- Chief Financial Officer David Friedman and sales and marketing chief Daniel Morris -- will return to Ford. Executive Vice President Philip Spender will remain.

Mazda Chief Executive Hisakazu Imaki -- the first Japanese CEO after a string of four Ford executives at the helm since 1996 -- will cede his post to another executive vice president, Takashi Yamanouchi, to become chairman of the board.

All personnel changes will take effect on Wednesday.

Slowing auto sales and the global financial crisis have sent shares of Ford plunging and led to a worse-than-expected $2.98 billion operating loss in the latest quarter.

The two companies, which share vehicle platforms and engineering resources and jointly own assembly plants in the United States, Thailand and China, will maintain their strategic ties, Imaki told a news conference at Mazda headquarters in Hiroshima, monitored in Tokyo.

"The sale of Mazda shares by our partner, Ford, will not result in any change in Mazda's strategic direction," said Imaki, who turns 66 next month. "We will continue our strategic relationship through our ongoing joint ventures with Ford, as well as the sharing of platforms and powertrains."

Since taking control of Mazda in 1996, Ford has rescued the Japanese carmaker from the brink, helping it to restore its brand image through strong, stylish products such as the Mazda6/Atenza and Mazda3/Axela.

In return, Ford has benefited by tapping Mazda's strength in the development of smaller cars.

"This agreement allows Ford to raise capital that will help fund our product-led transformation, and at the same time, allows Ford and Mazda to continue our successful strategic relationship in the best interest of both companies," Ford CEO Alan Mulally said in a statement released by Mazda.

Analysts have said they expected little short-term change to the relationship between Ford and Mazda given their closely intertwined operations and platform-sharing.