|To begin, I want to briefly report on recent changes in FHI’s strategic alliances, which we previously announced on October 5.
Briefly stated, the decision was made to dissolve our strategic alliance with General Motors Corporation (“GM”), which had been in place for about six years. At the same time, a basic agreement was reached with Toyota Motor Corporation (“Toyota”) for business collaboration, and we are moving to forge a new relationship with them.
Of our stock held by GM, 68 million shares were sold directly to Toyota. The remaining 89 million shares were sold through ToSTNeT-2, the Tokyo Stock Exchange Trading Network System 2, which operates on an off-hours and market trading basis.
At this time, FHI carried out a share buyback, then acquired 62.504 million own shares at an average price of 629 yen. The overall cost of this transaction came to 39.3 billion yen, which we financed with our cash reserves.
As a result, Toyota has become our largest shareholder, with 8.7 percent of our total shares (which works out to 9.5 percent on a voting stock base).
At FHI, we are facing steadily growing demands for strengthened technical development and cost competitiveness to address the critical issues of safety and the environment. We felt that a “new framework for collaboration” was required to ensure continued growth for the Subaru brand. This led to our conclusion that the best choice under these circumstances was to establish a new relationship with Toyota.
As we all know, Toyota is the most leading company in automobile industry, their outstanding business strategies and methods from which we have much to learn.
Both FHI and Toyota share the same philosophy in our approach to this new collaboration. That is, we are in agreement on the understanding that, “establishing cooperative ties and working through an alliance to resolve business challenges, while at the same time respecting each others management autonomy and brand uniqueness, will fuel mutual progress and growth.”
Following the basic agreement, joint steering committees are organized to probe specific approaches and cooperative projects capable of manifesting mutually synergistic effects in the development and production fields of our respective automotive divisions. The committees have commenced efforts to work out the specific contents of the business alliance.
At this point in time, I cannot comment on the particulars of this work. Please rest assured, however, that detailed explanations will be made available soon as the project is fully underway.