* Ford to raise $538 million as scrambles for cash
* To remain top Mazda shareholder with 13 pct
* Strategic relationship to continue
* Ford, with Chrysler and GM, seeking US govt lifeline (Adds share buyback method)
By Chang-Ran Kim, Asia autos correspondent
TOKYO, Nov 18 (Reuters) - Ford Motor Co, scrambling for cash as the U.S. Big Three automakers struggle to stay alive, will end 12 years of control of Mazda Motor Corp through the sale of a 20 percent stake in the Japanese carmaker for around $540 million.
Ford will remain Mazda's top shareholder with a stake of just over 13 percent.
Mazda, in which Ford first took a stake in 1979, said on Tuesday it would buy back 6.87 percent of its own shares from Ford for up to 17.9 billion yen ($185 million), keeping them as treasury stock. More than 20 undisclosed business partners will purchase the remaining 13 percent, Mazda said.
Reeling from slowing sales, Detroit's General Motors Corp, Ford and Chrysler LLC are desperately trying to raise cash to survive in the worst economic crisis since the Great Depression. Executives from all three are expected to amplify their calls for a financial lifeline from the U.S. government at Congressional hearings beginning on Tuesday.
As part of the ownership change, Mazda said two board members -- Chief Financial Officer David Friedman and sales and marketing chief Daniel Morris -- would return to Ford. Executive Vice President Philip Spender will remain.
Mazda Chief Executive Hisakazu Imaki -- the first Japanese CEO after a string of four Ford executives at the helm since 1996 -- will cede his post to another executive vice president, Takashi Yamanouchi, to become chairman of the board.
All personnel changes will take effect on Wednesday.
Slowing auto sales and the global financial crisis have sent shares of Ford plunging and led to a worse-than-expected $2.98 billion operating loss in the latest quarter.
The two firms, which share vehicle platforms and engineering resources and jointly own assembly plants in the United States, Thailand and China, will keep their strategic ties, Imaki told a news conference at Mazda headquarters in Hiroshima, monitored in Tokyo.
"The sale of Mazda shares by our partner, Ford, will not result in any change in Mazda's strategic direction," Imaki, who turns 66 next month, said. "We will continue our strategic relationship through our ongoing joint ventures with Ford, as well as the sharing of platforms and powertrains."
Since raising its stake in Mazda to a controlling 33.4 percent in 1996, Ford has rescued the carmaker from the brink, helping it to restore its brand image through strong, stylish products such as the Mazda6/Atenza and Mazda3/Axela.
In return, Ford has benefited by tapping Mazda's strength in the development of smaller cars.
"This agreement allows Ford to raise capital that will help fund our product-led transformation, and at the same time, allows Ford and Mazda to continue our successful strategic relationship in the best interest of both companies," Ford CEO Alan Mulally said in a statement released by Mazda.
Analysts have said they expected little short-term change to the relationship between Ford and Mazda given their closely intertwined operations and platform-sharing.
Some said having a more stable set of shareholders could be positive for Mazda, although the arrangement would leave its balance sheet, already on the weak side, slightly weaker.
"It's not the ideal solution from anyone," said an analyst at a Western brokerage, declining to be named.
"From a strategic perspective there's not much change, but it was a desperate move by Ford, selling at this low price, and Mazda had no choice but to buy back part of it because they couldn't find enough buyers."
Mazda, which had cash or cash equivalents worth 215 billion yen at the end of September, said it would use its own funds to buy back the shares at Tuesday's closing price of 184 yen. It will buy the shares in off-hours trading on the Tokyo Stock Exchange before the market opens on Wednesday.
Earlier this year, Ford sold the premium Jaguar and Land Rover brands to India's Tata Motors Ltd and is said to be looking for a buyer for its Volvo Cars arm.
Ford has promised to keep the remaining 13 percent stake for the time being, Imaki said.
Mazda's shares jumped on an earlier Nikkei business daily report that the announcement could come on Tuesday. The stock ended the day 6.4 percent higher at 184 yen.
Imaki declined to disclose the other buyers, but media reports have named trading houses Sumitomo Corp and Itochu Corp, auto parts maker Denso Corp and non-life insurance companies including Tokio Marine Holdings Inc among the possible buyers.
A day earlier, GM said it would sell the remaining 3 percent it held in Suzuki Motor Corp for $232 million.
That transaction was completed on Tuesday. (Editing by Hugh Lawson and David Cowell)