According to Reuters, Suzuki announced on Wednesday that will sell a 19.9 percent stake to Volkswagen for $2.5 billion and use half the proceeds to buy shares in the German automaker.
Suzuki will allocate 19.9 percent of itself to Volkswagen from its treasury stock.
Executives at Volkswagen, the world’s third-largest automaker, 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.
“Financially speaking, it’s helpful for Suzuki to have a partner to invest in future technologies,” said Chizuko Satsukawa, an autos analyst at Standard & Poor’s.
News of the Volkswagen-Suzuki alliance comes days after PSA Peugeot Citroen and Mitsubishi Motors Corp said they were exploring deepening their ties, which have been limited to a project-based partnership so far.