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Fuji Proposes Buyout of Subaru of America

January 17, 1990

DETROIT (AP) _ Fuji Heavy Industries Ltd., which owns 49.6 percent of Subaru of America Inc.’s outstanding shares, proposed Monday to buy the remaining stock for $6 a share, or $147 million.

Subaru of America has a total of about 48.5 million outstanding shares of common stock, and the $6 a share offer would value the entire company at about $291 million.

Some traders expect the bidding may go higher. Subaru stock rose $1 a share to $6.12 1/2 per share Tuesday in national over-the-counter trading.

″We believe that our proposed cash price is fair to Subaru of America’s shareholders, especially in light of the uncertain outlook for the U.S. automobile industry,″ Fuji Heavy Chairman Toshiro Tajima said.

″Only by controlling 100 percent of Subaru of America will we be in a position to effectively integrate the manufacturing and distribution process which, we believe, is critical to the growing demands of our U.S. dealer network and the interests of our customers,″ he said.

Subaru of America, headquartered in Cherry Hill, N.J., operates an assembly plant jointly with Isuzu in Lafayette, Ind., which Fuji Heavy officials said would benefit from the merger.

″I think the transaction will affect the Indiana plant positively. We hope to increase the manufacturing of cars and that would provide more jobs for the American people,″ said Dairoku Hosoki, director and general manager of Fuji Heavy.

Officials at Subaru-Isuzu Automotive Inc. refused to comment on the proposal, spokeswoman Chris Miller said.

Negotiations on the merger are expected to take a minimum of three months, said Peter Rona, president and chief executive officer of IBJ Shroeder Bank & Trust Co. of New York.

The proposed cash merger is between Subaru and a wholly owned Fuji subsidiary. Fuji is one of Japan’s largest manufacturers of transportation equipment, including Subaru cars. In fiscal 1989, auto exports to North America accounted for nearly 30 percent of Fuji’s total revenues.

Fuji sales for the fiscal year ending March 31, 1989, were more than $5 billion.

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