VW buys $2.5 billion Suzuki stake

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VW buys $2.5 billion Suzuki stake; eyes world No.1 spot

Posted on Wednesday, December 9th, 2009 at 3:30 PM EST.(Employee News)

Germany’s Volkswagen AG will buy a one-fifth stake in Suzuki Motor Corp. for $2.5 billion, tapping the Japanese firm’s expertise in small cars and dominance in India as VW seeks to become the No.1 automaker, Reuters reported.

The move is the second coup this week for ambitious VW Chairman Ferdinand Piech, coming on the heels of the German carmaker’s 3.9 billion euro ($5.8 billion) purchase of a 49.9 percent stake in sports car maker Porsche AG, the news service reported. Piech’s top lieutenant, VW Chief Executive Martin Winterkorn, was hopeful the Suzuki alliance would help catapult the Wolfsburg-based carmaker past industry leader Toyota Motor Corp ahead of plan, Reuters said.

The latest deal, confirming an earlier Reuters report, will see Suzuki invest up to half the proceeds in a cross-shareholding through the roughly 100 billion yen ($1.13 billion) purchase of a 2.5 percent voting stake in VW, the news service said. VW, which is also the No.1 carmaker in China, the world’s largest auto market, would provide Suzuki the technology to make the hybrid and electric cars it lacks in its lineup, the story said. (Reuters)