Friday, March 11, 2005

Mitsubishi settles with DCX over defect

The deal includes cash and the transfer of Mitsubishi's 20% stake in the truck firm.

Associated Press

Comment on this story Send this story to a friend Get Home Delivery

TOKYO -- Japan's Mitsubishi Motors Corp. said Thursday that it had settled with shareholder DaimlerChrysler AG on compensation for the costly defect cover-up and recall scandal at Mitsubishi Motors' truck unit.

The deal includes a cash payment of undisclosed size and the transfer of Mitsubishi Motors' entire 20 percent stake in the truck company to DaimlerChrysler, the German-American automaker.

One analyst estimated the settlement was worth as much as $800 million to DaimlerChrysler.

With the added 20 percent, DaimlerChrysler now owns 85 percent in Mitsubishi Fuso Truck & Bus Corp., which makes commercial trucks, heavy-duty buses and industrial vehicles like dump trucks and crane carriers.

The truck company is not publicly traded. The remaining 15 percent of Mitsubishi Fuso is held by Mitsubishi group companies including the Bank of Tokyo-Mitsubishi Ltd., Mitsubishi Heavy Industries Ltd., and Mitsubishi Corp.

Mitsubishi Fuso sold 193,000 trucks and buses in 2003, the most recent year for which figures were available. In addition to Japan, the company has a strong footing in Taiwan, Indonesia and Asia.

The new 20 percent stake in the truck business is worth approximately $482 million, boosting DaimlerChrysler's stake in the unit to about $1.87 billion, said auto analyst Georg Stuerzer of HVB Group in Munich.

Along with an estimated cash payment of 200 million euros to 250 million euros ($267.68 million to $334.6 million), Stuerzer said that means that DaimlerChrysler has gotten back nearly all the money it spent on the unit in 2004.

"It is a very good development for Daimler, as they have achieved nearly the optimum in negotiations," Stuerzer said.

Mitsubishi Motors officials were unavailable for comment on the terms late Thursday.

DaimlerChrysler was a key partner of the Tokyo-based automaker before deciding last year to end cash infusions to bail out the troubled company.

According to Stuerzer, DaimlerChrysler had a 19.7 percent stake in Mitsubishi at the end of 2004 and that stake has since come down to about 14 percent.