DaimlerChrysler sells stake in Mitsubishi

FRANKFURT, Germany -- Automaker DaimlerChrysler AG ended its ill-fated involvement with Japan's Mitsubishi Motors Co. on Friday, selling its 12.4 percent stake in the company to Goldman Sachs for an undisclosed price.

The German-American car maker once held 37 percent of Mitsubishi Motors as part of its goal to become a global auto powerhouse, but the company decided last year against pumping more money into the troubled Japanese automaker.

Before the latest share transaction, DaimlerChrysler was Mitsubishi Motors' fourth-largest shareholder. U.S. Investment bank Goldman Sachs Group Inc. now becomes Mitsubishi Motors' largest shareholder with a 13.4 percent stake.

'End of an episode'

"It's the end of an episode and is putting their relationship on a new basis," said Stephen Cheetham, European auto analyst for Bernstein & Co. Inc. in London, who said the move capped the company's attempt to boost market share in Asia through acquisitions.

Meanwhile, DaimlerChrysler said Friday that prosecutors had closed an insider trading investigation against two of the automaker's managers over stock deals before the resignation of chief executive Juergen Schrempp.

No evidence of wrongdoing

Prosecutors found no evidence of wrongdoing by management board member Ruediger Grube or communications chief Hartmut Schick, DaimlerChrysler spokesman Toni Melfi said. Prosecutors could not be reached Friday.

DaimlerChrysler announced July 28 that Schrempp would step down at the end of 2005 after decade with the company. But rumors of his departure had already sparked a strong rally in the company's stock that morning. Prosecutors began investigating after Germany's BaFin financial watchdog said in July it found "grounds" to suspect illegal trades in DaimlerChrysler shares just before the announcement.

Focusing on Mercedes

Now DaimlerChrysler, the world's fifth-largest car maker, is focusing its attention on its Mercedes Car Group and Chrysler in the U.S., Cheetham said.

DaimlerChrysler said the sale would boost its income for 2005 by some $588 million, money that analysts said could go toward cushioning the $1.1 billion DaimlerChrysler will spend as it cuts 8,500 jobs at its Mercedes Car Group in Germany.

DaimlerChrysler has been shedding some of its tie-ups and investments in other companies, in part to refocus on its automotive production. It sold off its stake in Hyundai Motor Co. Ltd. in 2004 and trying to find a buyer for its diesel engine maker MTU Friedrichshafen.

Mitsubishi had been a sore spot for DaimlerChrysler after the stake it acquired in the company pulled it deeper into the red.

Schrempp, who had pushed for the acquisitions, faced a boardroom revolt over the deal and the company pulled out save for its stake in Fuso, a commercial truck maker.

Schrempp steps down on Dec. 31, two years before the end of his contract. He's being replaced by Dieter Zetsche, who led the resurgence of the Chrysler Group and was among those opposed to bailing out Mitsubishi.

Mitsubishi Motors has seen its sales in Japan plunge after acknowledging five years ago that it had systematically hidden auto defects for more than two decades to avoid recalls.

The automaker has been getting financial bailouts from the Mitsubishi group of companies, including a bank, heavy machinery maker and trading company, after DaimlerChrysler withdrew its financial backing last year.

Mitsubishi Motors, or MMC, said current cooperation projects between the companies would not be affected by the share sale.

"MMC will maintain the relationship with DaimlerChrysler as business partners where both parties continue working on individual alliance projects that are mutually beneficial," the company said.

The two carmakers jointly develop and produce engines and share use of vehicle architecture. They also jointly produce passenger cars, sport utility vehicles and pickup trucks in Europe, North America, China and South Africa.

Mitsubishi Motors' lone North American assembly plant is in Normal, Ill. It employs nearly 2,000 hourly workers who build the Eclipse coupe, Galant sedan, Endeavor sport utility vehicle and, beginning next spring, a redesigned Spyder convertible.