The Japanese automaker has decided to repurchase its shares from Germany’s Volkswagen AG and will have to spend up to 471.7 billion yen ($3.9 billion), finally setting in the past a four-year botched alliance.
According to a Tokyo Stock Exchange filing, the Japanese company will acquire around 22.8 million shares at today’s closing price before the market reopens on Thursday after an arbitration court conceded to Suzuki’s desire to cease the partnership with the German carmaker and thus compel it to divest its 19.9 percent holding. Analysts and hedge fund managers are now advising the Japanese automaker to give up any further attempts to engage in cooperation with other, larger carmakers. Instead, Suzuki should develop strategies to further its dominant position on the Indian market, with Daniel Loeb’s hedge fund Third Point LLC announcing it has decided to acquire a stake in Suzuki. Chairman Osamu Suzuki – who back in the day was responsible for the botched deal with VW – commented that Suzuki would now focus on remaining independent even if it would partner up with other companies in the future.
Suzuki and Volkswagen initiated the alliance in order to jointly develop small, efficient cars for the emerging markets – a key area for Suzuki and a known soft spot in VW’s strategy. The smaller Japanese company would have in turn be allowed access to technology in return for assisting Volkswagen in developing more affordable models. But after 2011 the relationship went awry because Suzuki acquired diesel engine technology from Italy’s Fiat and both automakers started accusing each other of agreement violations.