Suzuki Will Spend $3.9 Billion to Buy Itself Back From Volkswagen

Mark Stevenson
by Mark Stevenson

Suzuki, while at Frankfurt showing off its new Baleno hatchback and next-generation Vitara, is dealing with a financial problem of sorts.

In order to buy itself back from Volkswagen, the Japanese automaker will have to shell out 471.74 billion yen — or $3.9 billion USD. Suzuki plans to purchase as many of those shares back as possible during off-hours trading, before the bell rings Thursday morning.

“It’s good that a resolution came. I feel refreshed. It’s like clearing a bone stuck in my throat,” said Osamu Suzuki to reporters gathered at a news conference in Tokyo a couple of weeks ago. “I’m very satisfied with the resolution. Through it, Suzuki was able to attain its biggest objective.”

Volkswagen was ordered to sell back its 19.9-percent stake in Suzuki last month.

The $3.9 billion figure represents the number of shares held by Volkswagen — 122.77 million — multiplied by Wednesday’s closing share price.

According to Reuters, at least one Suzuki shareholder, U.S.-based hedge fund Third Point LLC, has urged Suzuki to cancel the shares after they are purchased and that the automaker should focus on improving value for existing shareholders.

Suzuki reportedly had nearly $8 billion USD in cash reserves at the end of March.

Mark Stevenson
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  • Th009 Th009 on Sep 16, 2015

    That's EUR 3.45 billion ... in purely financial terms, VW gets paid handsomely for this misadventure, given that they paid only EUR 1.7 billion for those same shares in 2010. But Osamu Suzuki gets to still be in charge, so I suspect he won't mind paying a few billion for that privilege.

  • Inside Looking Out Inside Looking Out on Sep 16, 2015

    Does FCA have $8 bil cash on hand? It would make sense for Sergio to "merge" with Suzuki. VW can take care of GM.

    • Lorenzo Lorenzo on Sep 17, 2015

      FCA has $8 billion net debt, not cash. According to its balance sheet, it has $40 billion in long term debt, so it must have a pile of cash to get the net down to $8 billion. It just can't spend it, or the company will look like it's hanging by a thread, which it is. That's why Sergio wants to merge with somebody - to off-load that debt so his bosses the Agnellis can bail out of the car business, and Sergio can retire with a big payoff.

  • TDIGuy TDIGuy on Sep 17, 2015

    I always hoped Suzuki cars would hold on in Canada. Despite attempting to sell a rebadged Nissan as their pickup truck (the worst selling vehicle in Canada, I think they sold like 22 or so). The SX4 was a good mini CUV built in partnership with Fiat, so I was hoping FCA might move it over to their stable once Suzuki disappeared from North American shores. Kizashi was good and they made a real off road capable SUV that wasn't overly expensive. Aside from the whole rebadged Daewoo thing, I wonder if they ever lived down the whole Samurai rollover debacle? Not that it bothered me, but those stories tend to live longer than the actual issue.

  • Wmba Wmba on Sep 17, 2015

    "one Suzuki shareholder, U.S.-based hedge fund Third Point LLC, has urged Suzuki to cancel the shares after they are purchased" Yes, poor old Daniel Loeb at Third Point might not make his vaunted 20% return this year. Tough. I imagine that Suzuki is highly uninterested in what Loeb thinks - he's a piker compared to VW. Usually Western companies cave into Loeb's blandishments about being more efficient (so as to drive up share prices) from his lofty perch of 6 or 8% of the shares, but Sony told him to take a hike and there was nothing he could do about it. Same here.