Volkswagen-Suzuki: Sushi, Anyone?
Interesting twist in the Volkswagen-Suzuki sopu opera (see, Japanese is easy!): Suzuki could be doing Volkswagen a favor by filing for divorce. This way, Volkswagen can swallow Suzuki whole.
According to a report in the German magazine Der Spiegel, there is a clause in the pre-nup between Volkswagen and Suzuki that precludes Volkswagen from getting more than the current 19.9 percent of Suzuki. However, if Suzuki cancels the agreement, then Volkswagen is no longer bound to that clause either and can start buying Suzuki shares in the open market, or from willing sellers. With its 19.9 percent, Volkswagen already is the largest single shareholder of Suzuki.
According to Der Spiegel ( and TTAC), Volkswagen always had the majority of Suzuki in mind. Volkswagen CEO Martin Winterkorn had suggested to Osamu Suzuki that future car development could be done in four places: Wolfsburg develops the compact cars, Ingolstadt develops the upper class, Porsche in Weissach develops sports cars, Suzuki in Hamamatsu develops small cars. If Volkswagen gets the Suzuki majority, that is.
Osamu Suzuki’s answer: Iie kekkou des! (No thanks.) Let’s see whether this offer is still on the table after a less than amicable takeover.
The market is betting on a take-over by someone. After deterioration to 1,480 yet a few days ago, the Suzuki share traded for 1,610 on Friday and will most likely climb more on the back of these news.
Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.
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Hostile takeover is all but impossible to implement in Japan, and surely VW is smart enough to realize that fact. This to me sounds like VW saying to Suzuki “we are not selling these shares UNLESSS the price is right.”
Triumph motorbikes are very profitable and fiercely independent having already rebuffed BMW (allegedly).
A hostile takeover of Suzuki is possible in theory; however, in reality, there's zero chance for it to succeed in Japan. For one thing, Suzuki could easily block it with a poison pill. Consider this important legal precedent: A few years ago a small Japanese condiment maker --Bull Dog faced a hostile takeover tender offer from a New York-based investment fund --Steel Partners. Bull Dog had valuable real estate holdings, which was the main attraction for Steel Partners. Bull Dog activated a poison pill, and was subsequently sued by Steel Partners to block the pill. The case went all the way to the Japanese Supreme Court, which upheld the legality of Bull Dog's poison pill. It is purely an intellectual exercise to think that VW could takeover a highly-profitable, cash rich Fortune Global 500 corporation with tens of billions of dollars in revenue, when it's not even possible to takeover a small sauce maker with a few million dollars in revenue.
Why does VW needs Suzuki's car business? For small products? VW has multiple cars starting with old platforms sold in 3rd countries and going into the Polo, Golf and the new UP! IMHO Suzuki USA is missing the mark. Not enough dealerships or product line. NO more 3rd seat SUV. No new SUV. The praised Swift never came over. Tiny Alto and Splash anyone??? No one knows Kizashi. No one. They didn't even find a rental company to pick up some for the sake of getting more people with money behind their wheel and product seen on the roads. Saab recently got some cars into Enterprise RAC. As did Fiat 500. Subaru and Hyundai / KIA have surprised lot's of people who never considered their brands. The SX-4 4x4 has limited market and cannot keep this brand alive.