Volkswagen to Take 19.9 Pct Stake in Suzuki

Tokyo, Dec. 9 (Jiji Press)--Suzuki Motor Corp. <7269> of Japan and
Volkswagen AG of Germany said Wednesday that they have agreed to forge a
comprehensive alliance, with Volkswagen set to take a 19.9 pct equity stake
in the partner.

The Volkswagen-Suzuki pair will thus become one of the world's
biggest automotive groups, coming close to top Japanese automaker Toyota
Motor Corp. <7203> in terms of annual global vehicle sales.
Under the deal, Volkswagen will acquire 107,950,000 Suzuki shares
for 2,061 yen apiece in January 2010 for a total of 222.4 billion yen,
becoming the top shareholder of the Japanese firm. The per share acquisition
price is 10 pct lower than Suzuki stock's closing price of 2,290 yen on the
Tokyo Stock Exchange's first section on Tuesday.
Suzuki, for its part, will invest some 100 billion yen in
Volkswagen. As a result, the Japanese firm is expected to take a stake of
around 2.5 pct in the German firm.
The two firms aim to jointly develop eco-friendly vehicles,
including hybrid and electric vehicles, and cooperate in their operations in
India, where Suzuki is a major player.
In 2008, Volkswagen ranked third in global new vehicle sales with
6.25 million units, while Suzuki was ninth with 2.36 million units.
Their combined sales, at 8.61 million units, were the second
highest last year after Toyota's 8.97 million units, but are on course to
exceed Toyota's in 2009.
At a news conference to announce the deal, Suzuki President and
Chairman Osamu Suzuki said the two companies will discuss further details of
their alliance to decide priority areas of cooperation.
Volkswagen Chairman Martin Winterkorn said the two companies can
complement each other well.
In 1981, Suzuki formed a business partnership with U.S. auto giant
General Motors. The two firms launched a joint venture in Canada and
collaborated to develop vehicles in Europe and Japan.
GM's stake in Suzuki once topped 20 pct. But the U.S. company
started to sell its Suzuki stake back to the Japanese firm in 2006 and
dissolved the capital alliance in November last year following deterioration
in its earnings.
After GM's collapse in June this year, Suzuki's joint development
of eco-friendly vehicles with the U.S. automaker was suspended.
Against this backdrop, Suzuki has been looking for a new partner to
develop eco-friendly vehicles and meet tighter emissions standards.
Meanwhile, the new alliance will allow Volkswagen to use Suzuki's
strong sales network in India. Suzuki, which entered the Indian market in
the 1980s, now boasts a market share of some 50 pct there.
The day's announcement came after French automaker PSA Peugeot
Citroen last week said it is in talks to take a stake in Japan's Mitsubishi
Motors Corp.