Toyota Financial News

Fuji Heavy Industries Ltd., which makes the Subaru brand vehicles, said on Friday its decision to sell 61 million of treasury stock that has a major rival Toyota Motor Corp. for 31.11 billion yen ( $ 291.1 million), In order to increase capital and business partnership between the two companies.

The move came after Toyota (NYSE: TM - news - people) completed preliminary hearings with the Fair Trade Commission and an agreement was reached on April 10.

On July 14, Fuji Heavy will sell its shares to 510 yen each, or a 10 percent premium over the average closing price between December 11 and March 10.

The operation Toyota will increase the voting rights in Fuji Heavy to 16.16 percent from 9.50 percent at present.

Toyota, which has been competing in close collaboration with General Motors Corp. (NYSE: GM - news - people) for the title of the world’s largest manufacturer, bought its current participation in Fuji Heavy to GM in 2005.

However, since capital formation and business alliances, the two companies have thus far been slow progress in achieving synergies.

Fuji Heavy currently makes Toyota Camry models at its U.S. plant, and also sells Justy compact cars in Europe under an original equipment manufacturers (OEM) contract with Daihatsu Motor Co., another unit of Toyota makes mini cars.

Under the expanded alliance, Toyota and Fuji Heavy jointly develop and market compact sports cars using property Fuji Boxer, or horizontally opposed engine, which is similar to Porsche AG (other OTC: PSEPF.PK - news - people) ‘ s engine.

The two companies aim to release the new interface engine rear drive sports car in late 2011 and make them into a new assembly line to be built at Fuji Ota plant in Gunma prefecture.

Toyota will also supply its compact cars to Fuji under an OEM contract before the end of 2010.

Moreover, its bid also Daihatsu Coo mini vehicles to Fuji Heavy on sale in Japan under the OEM deal. From October this year, Fuji will acquire some Coo 6,000 vehicles a year from Daihatsu.

The agreement also will allow Fuji to stop making mini-cars and focus its resources on non-mini car segment.