Volkswagen AG plans to take a stake of up to 20 percent in Suzuki Motor Corp, providing Suzuki with a much-needed development partner and giving VW access to better small car technology.
Though sources with direct knowledge of the negotiations have claimed that the Volkswagen’s stake could rise up easily so that to control more than one-third of the stakes in future. A 20 percent stake in Suzuki would be worth about 250 billion yen ($2.80 billion) at current prices if we go by the data provided to us by Reuters.
Spokesmen at Volkswagen and Suzuki Motor Corporation have still not commented on anything as of yet. Executives at Volkswagen, the world’s third-largest automaker and Europe’s largest car maker, have publicly said over the past half year that Suzuki would be an interesting target given its expertise in small cars, a key segment to compete in emerging markets.
Suzuki, Japan’s fourth-largest automaker, for its part, has said it would welcome any partnership that made sense after losing its ties to General Motors Co, which it had relied on for help with hybrid and other next-generation technology.
Suzuki, which dominates the Indian market through Maruti Suzuki, as well as the unique Japanese segment for 660cc mini vehicles, has a market capitalisation of $13.7 billion, against Volkswagen’s $45.7 billion. Suzuki holds 20 percent of itself in treasury stock, bought back from GM between 2006 and 2008.
While Volkswagen’s overtures to Suzuki have become common knowledge within the industry, the move comes as a surprise after Suzuki Chief Executive Osamu Suzuki had categorically denied any talks of a tie-up as recently as last month. On the other hand, the septuagenarian CEO, who is also chairman and president of the company founded by his wife’s grandfather, has often and openly said his “small” company needed a partner to survive the fierce competition washing over the industry.
Though sources with direct knowledge of the negotiations have claimed that the Volkswagen’s stake could rise up easily so that to control more than one-third of the stakes in future. A 20 percent stake in Suzuki would be worth about 250 billion yen ($2.80 billion) at current prices if we go by the data provided to us by Reuters.
Spokesmen at Volkswagen and Suzuki Motor Corporation have still not commented on anything as of yet. Executives at Volkswagen, the world’s third-largest automaker and Europe’s largest car maker, have publicly said over the past half year that Suzuki would be an interesting target given its expertise in small cars, a key segment to compete in emerging markets.
Suzuki, Japan’s fourth-largest automaker, for its part, has said it would welcome any partnership that made sense after losing its ties to General Motors Co, which it had relied on for help with hybrid and other next-generation technology.
Suzuki, which dominates the Indian market through Maruti Suzuki, as well as the unique Japanese segment for 660cc mini vehicles, has a market capitalisation of $13.7 billion, against Volkswagen’s $45.7 billion. Suzuki holds 20 percent of itself in treasury stock, bought back from GM between 2006 and 2008.
While Volkswagen’s overtures to Suzuki have become common knowledge within the industry, the move comes as a surprise after Suzuki Chief Executive Osamu Suzuki had categorically denied any talks of a tie-up as recently as last month. On the other hand, the septuagenarian CEO, who is also chairman and president of the company founded by his wife’s grandfather, has often and openly said his “small” company needed a partner to survive the fierce competition washing over the industry.
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