Monday, 19 September 2011

Volkswagen may launch Hostile takeover bid for Suzuki : Report

Volkswagen could make a move to take over Japan's Suzuki, German magazine Der Spiegel reported, citing an unnamed senior manager at VW. "I do not rule out this possibility," the weekly quoted the person as saying on Sunday.  Japanese news agency Kyodo also reported citing senior Volkswagen officials that the Wolfsburg, Germany-based carmaker might launch a hostile takeover bid of Suzuki Motors. 

Volkswagen declined to comment on the matter.

Volkswagen is planning to acquire Suzuki Motor's operations which are based out of Japan. Suzuki Motors is the parent of Maruti Suzuki and controls 54.21% in India's largest car manufacturer.  Volkswagen and Suzuki Motors had an agreement for manufacturing small cars and there have been issues with managements of both the companies, hence, the JV was put on hold.

Volkswagen is not ready to compromise on anything and with veto powers and close to 20% shareholding, it wants management control of Suzuki. This could be positive news for Maruti as any kind of acquisition of parent or substantial management control change can trigger an open offer under SEBI laws. This can change the entire shareholding pattern in Maruti.

CEO Suzuki offered to buy Volkswagen's 19.9 percent stake in his company with cash on hand, but VW said it was happy with its investment and had no intention of selling.

"I think it is rather unlikely that Volkswagen will go for a hostile takeover of Suzuki," Macquarie Research analyst Christian Breitsprecher said.

Abdul Majeed of Pricewaterhouse Coopers India says, "The way the automotive industry is going through, obviously you expect some sort of a consolidation at a global level depending on the competition and obviously every car manufacturer is trying to make sure that they have a good footage in China and India."

According to Spiegel, VW cannot raise its stake in Suzuki without the Japanese company's consent as long as the alliance between the two companies is still in place. But if Suzuki cancels the partnership, VW would be free to stock up, it said.


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