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R80 Million for GMSA’s 30% Stake Seems a Little

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25 May 2017 Update: GMSA replied to the question posed below as follows – It is standard practice when a Japanese company issues a media release to include details of the CEO and the authorised share capital of the company. This is where the R80 million comes from. This amount represents the original share capital of the company when Isuzu Trucks South Africa was established in 2006 and has absolutely no relation to any transaction today in respect of the sale of the 30% GM shareholding to Isuzu.

MyPE then asked what the purchase figure was for the 30% stake and the reply was that the media center had not been made aware of the figure so could not speculate.

An 18 May 2017 press release from Isuzu Motors Limited announced the sale of GMSA’s pickup truck business to an entity tentatively named Isuzu Truck South Africa (Pty) Limited (ITSA).

Before the business transfer, Isuzu will purchase from GMSA a 30% equity stake in ITSA, which assembles and distributes Isuzu commercial vehicles, whereby Isuzu will transform the company into its wholly-owned subsidiary with a new company name of “ISUZU MOTORS SOUTH AFRICA (Tentative)”.

Isuzu will further reinforce sales, marketing and after-sales activities for commercial vehicles and pickup trucks to establish a foundation for sustainable, long-term business growth in the South African market.

According to the release Isuzu has budgeted/put aside/estimated an amount of capital for this transaction in the amount R80 Million (about 650 million Yen).

From the release it is not clear if that amount is only to buy General Motors 30% or if it is the total amount to be invested in the plant and transfer plus the sale of 30%. So, the amount could be less… or more.

If the R80 Million is just for the 30% stake that would value Isuzu’s business at R266.66 Million which does seem to be a bit of a bargain price.

To put that estimate in perspective: In July 2009 the 5th Generation Isuzu KB marked the biggest, single, product line investment in the history of the company. Capital expenditure in excess of R500 million was undertaken, with the lion’s share going towards tooling and facilities development at the company’s Kempston Road plant in Port Elizabeth.

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Alan Straton

Chief Cook, Bottle Washer and Broom Mechanic at MyPE
Passionate about Port Elizabeth and definitely NOT packing for Perth. Alan's ethos is epitomised in the words of Nelson Mandela; "I have fought against white domination and I have fought against black domination. I have cherished the idea of a democratic and free society. If need be, it is an ideal for which I am prepared to die." See more articles by Alan.