Ford Motor Co plans to sell almost all of its remaining stake in Mazda Motor Corp as it distances itself from the Japanese automaker it once controlled, a source with knowledge of the matter said on Saturday.
Ford would cut its Mazda stake to a few percent from 11 percent and trading house Sumitomo Corp and other Japanese business partners of Mazda are in talks to buy the shares, the source said.
The source, who spoke on condition of anonymity because the deal has not been made public, also said a final decision on the sale was likely to be made by the end of the year.
The Nikkei business daily first reported on the likely stake sale by Ford earlier on Saturday.
Ford and Mazda called the report speculation, issuing similar statements stressing their strategic alliance remained intact.
"Ford's ownership stake in Mazda remains unchanged," Ford said. "Ford continues to have a close strategic relationship with Mazda and we cooperate in areas of mutual benefit. We have no further comment on the speculation."
The Nikkei said Ford would sell its Mazda stake to 3 percent or less. The 11 percent stake makes Ford the largest shareholder of Mazda. It would lose that position if a sell-down occurs.
At the end of business in Japan on Friday, Ford held 195 million Mazda shares at a value of 42 billion yen ($516 million).
Sumitomo Mitsui Banking is likely to replace Ford as the largest shareholder in Mazda because Sumitomo Mitsui Financial Group Inc already has a 2.9 percent interest in the Japanese automaker.
Ford once saw Mazda as a way to help it develop small cars. Some of Ford's current top executives moved through the leadership of Mazda, including Ford President of the Americas Mark Fields and Chief Financial Officer Lewis Booth.
Ford sold its controlling stake in Mazda to free up cash. The Ford stake was reduced to 13 percent from one-third ownership in late 2008, and later to 11 percent when Mazda issued more shares to raise cash for investing in hybrid and other technologies.
While the long-time partners have many intertwined operations, many observers have said they expected vehicle platform-sharing and other close cooperation to diminish going forward, reflected in Ford's declining stake in Mazda.
In the most recent such distancing, Mazda in March turned to Toyota Motor Corp for help in developing its first hybrid car.
The sell-down of its controlling stake in Mazda was one in a series of divestments Ford made to raise cash and to narrow its focus after wide-ranging acquisitions of luxury brands that ultimately failed to generate profits.
Ford sold its Swedish brand Volvo to China's Geely in August. The Volvo sale, coupled with its plans to close its Mercury brand, leave the US automaker with its mass-market Ford and luxury Lincoln brands.
Aston Martin, Jaguar and Land Rover brands had been sold previously.
Last month, Ford's global manufacturing and affairs chief, John Fleming, said the tie-up with Mazda produces two to three shared manufacturing opportunities a year.
The two automakers are partners in a $350 million investment in a Thailand plant to build the next generation of compact pickup trucks. Production is to start in mid-2011.
Three months ago, Ford and Mazda opened a $500 million plant in Thailand to build Ford Fiesta and Mazda2 passenger cars.