Ford Still Shopping Mazda Stake; Tata Uninterested

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Since then Tata Motors' stock, already down 53% in 2008, has dropped a further 16%, to $6 a share. "It is going to be tough for investors to subscribe [to the current terms]," say Ramnath Subramaniam, director of research at Mumbai-based IDFC-SSKI Securities.

Likely Japanese Buyer for Mazda Stake

If all that wasn't enough to deter the company from making another eye-catching deal, there are also the well-documented problems with the Nano, Tata's $2,500 car, which is slated for a fourth-quarter launch. Tata has endured prolonged protests at the site of its Nano factory in Singur, East Bengal (BusinessWeek.com, 8/29/08). Now it's relocating the plant to Sanand, Gujarat, at a cost of $62 million. Analysts say it will miss an earlier target to sell 40,000 Nanos by March 2009.

So what will become of Mazda? Reports in Japan say that if Ford's sale of some or all of its stake in Mazda goes ahead, Japanese trading companies Sumitomo (8053.T) and Itochu (8001.T), both of which work with Mazda on overseas sales, are likely buyers. According to an Oct. 12 report in Japan's Nihon Keizai Shimbun newspaper, Ford has approached 20 to 30 Japanese companies and financial institutions about buying its shares: Sumitomo and Itochu are keenest, according to the paper.

Less likely would be a share sale to another non-Japanese automaker. Speaking in August before the current speculation, Credit Suisse (CS) analyst Koji Endo said any proposed sale to an unwanted suitor would be blocked by Mazda's main bank, Sumitomo Mitsui (8316.T), which would "do whatever they can to prevent this from happening" if they don't favor the buyer (BusinessWeek.com, 8/4/08). Given these factors, a Japanese buyer seems most likely.

Rowley is a correspondent in BusinessWeek's Tokyo bureau. Lakshman covers India business for BusinessWeek.