Sumitomo Mitsui to overtake Ford as Mazda's top shareholder

Sumitomo Mitsui Financial Group Inc. expects to overtake Ford Motor Co. as the largest shareholder in Mazda Motor Corp., according to the bank’s chairman.

The company will become the leading shareholder in Mazda by the end of this year, Masayuki Oku, chairman of the Tokyo-based bank, said today. Ford, Mazda’s largest current shareholder, owns about 11 percent of the Hiroshima, Japan-based automaker. Sumitomo Mitsui Financial Group owns at least 2.9 percent, according to data compiled by Bloomberg.

Ford, which held a controlling stake in Mazda until two years ago, has joint ventures in Thailand and the U.S. with the Japanese company, while the companies plan to dissolve a partnership in China. Ford has reached a tentative agreement to reduce its holding, worth about $515 million, by selling shares to Sumitomo Mitsui, Sumitomo Corp. and suppliers of the Japanese automaker, Nikkei English News reported Oct. 16, without saying where it got the information.

“There might be a gap between Mazda and Ford in their affiliation strategy,” said Takeshi Miyao, an analyst at consulting company Carnorama in Tokyo. “Ford should focus on strengthening business in developing countries like China or Thailand and shift production to South East Asia,” while Mazda has been trying to reinforce its domestic production, he said.

Mazda fell 0.9 percent to 212 yen in Tokyo, after earlier declining as much as 4.7 percent.

Capital Relationship

The Nikkei report about a change in the capital relationship between the two automakers is speculation, Mazda said in an Oct. 16 statement. Ken Haruki, a spokesman for the automaker, declined to comment further when contacted by Bloomberg News today.

“Ford’s ownership stake in Mazda remains unchanged,” Mark Truby, a Ford spokesman, said Oct. 15. “Ford continues to have a close strategic relationship with Mazda, and we cooperate in areas of mutual benefit. We have no further comment on the speculation.”

Ford is not releasing Mazda shares because it needs the finance, Sumitomo’s Oku said earlier today. The business tie-ups and spirit of the Ford-Mazda alliance won’t change, he said.

’Good for Mazda’

The bank will hold on to the Mazda stake it plans to buy by the end of the year “for a while,” Oku said.

“Having a bank as the largest shareholder is good for Mazda to ensure its financial status,” said Tatsuya Mizuno, a director at Mizuno Credit Advisory in Tokyo. “Mazda needs to find a new auto partner in the long term.”

Mazda had 64.4 billion yen ($793.6 million) in long-term borrowing from Sumitomo Mitsui, according to the automaker’s annual financial report. Mazda is considered part of Sumitomo’s network of Japanese corporations, or keiretsu, that typically own stakes in one another.

Ford owns more than 195 million Mazda shares, valued at about $515 million, based on last week’s closing price in Tokyo.

The second-largest U.S. automaker has signaled it intends to end developing cars and trucks jointly with Mazda. Ford’s new Fiesta small car is based on the mechanical foundation of the Mazda2 subcompact. Ford’s Fusion family sedan is based on the Mazda6 platform and its new Ranger pickup truck is built alongside its mechanical twin, the Mazda BT-50, at a factory in Thailand that the automakers jointly own.

“For a lot of designing and engineering, we’re going to be focused on Ford,” Mark Fields, Ford’s president for the Americas and a former Mazda chief executive, said last December. “Our efforts will be focused on the Ford system, as opposed to relying on others such as Mazda.”

In China, the world’s biggest auto market, Mazda and Ford are dissolving a joint venture with Chongqing Changan Automobile Co., Chief Executive Officer Takashi Yamanouchi said on July 1. A restructuring of the venture, currently 35 percent owned by Ford, 15 percent owned by Mazda and the rest held by Changan, will result in Mazda and Ford each forming 50-50 ventures with Changan, he said.