TOKYO (Reuters) – Ford Motor Co will end 12 years of control of Mazda Motor Corp through the sale of a 20 percent stake in the Japanese carmaker in the latest sign of desperation among the U.S. Big Three as they scramble to raise cash.

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 business partners will purchase the remaining 13 percent.

Reeling from slowing sales, Detroit's General Motors Corp, Ford and Chrysler LLC are desperately trying to raise cash to stay alive through the worst economic crisis since the Great Depression. Executives from the Big Three are expected to amplify their calls for a financial life-line from the government at congressional hearings beginning on Tuesday.

As part of the ownership change, Mazda said two board members would return to Ford, while Executive Vice President Philip Spender will remain.

Mazda Chief Executive Hisakazu Imaki -- the first Japanese CEO after a string of four Ford executives -- will cede his post to another executive vice president, Takashi Yamanouchi, to become chairman of the board.

Ford, whose coffers are depleted from a relentless sales slide mainly in the United States, will raise more than 52 billion yen ($538 million) from the sale of the stake, Mazda said.

Slowing auto sales and the global financial crisis have sent shares of Ford plunging, and its coffers are depleted. It reported a worse-than-expected $2.98 billion quarterly operating loss this month.

The two firms will keep their strategic ties, and Ford will hold on to its remaining stake and stay Mazda's top shareholder, CEO Imaki told a news conference at its headquarters in Hiroshima, monitored in Tokyo.

"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.

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.

Ford first took an equity stake in Mazda in 1979 and brought it under its control in 1996 as the Hiroshima-based carmaker struggled to survive.

"The sale of Mazda shares by our partner, Ford, will not result in any change in Mazda's strategic direction," Imaki said. "We will continue our strategic relationship through our ongoing joint ventures with Ford, as well as the sharing of platforms and powertrains."

The partners share vehicle platforms and engineering resources and jointly own assembly plants in the United States, Thailand and China.

Imaki declined to disclose the other buyers of its shares, saying only that there were more than 20 companies. Media reports have named trading houses Sumitomo Corp and Itochu Corp, auto parts maker Denso Corp, non-life insurance companies including Tokio Marine Holdings Inc as possible 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 on Wednesday at Tuesday's closing price of 184 yen.

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 say having a more stable set of shareholders would be positive for Mazda.

A day earlier, GM said it would sell the remaining 3 percent it held in Suzuki Motor Corp for $232 million. [ID:nT7388] That transaction was completed on Tuesday.

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.

(Reporting by Chang-Ran Kim; Editing by Hugh Lawson)