New Delhi: Indian car major Maruti's
Japanese parent Suzuki on Wednesday said it will sell 19.9 percent
stake to Germany's Volkswagen for about USD 2.5 billion (about
Rs 11,500 crore).
The cross-border deal is expected to have a positive
fall-out for Maruti Suzuki, which could become a global hub
for supplying small cars through Volkswagen's strong network.
"They (Suzuki) confirmed the deal, but it is too early to
speculate on its implications on India (Maruti). The deal
means Volkswagen and Suzuki see much value in the arrangement
in terms of technology sharing.
"Volkswagen has looked at Suzuki obviously from a small
car angle," Maruti Suzuki India Chairman R C Bhargava said.
Although details are yet to be worked out, he said India
may become an original equipment manufacturer and supplier of
small cars for Volkswagen.
Suzuki Motor said its strengths are in producing small-
size vehicles and having the support of customers in Japan,
India and Southeast Asia.
It said the two companies -- Suzuki and Volkswagen --
will focus on emerging markets and making environmentally
friendly cars.
The Japanese company said the world automotive industry
is in the midst of significant changes where manufacturers
risk being left behind in the market if they are late in
adopting environmentally friendly hybrid and electric cars.
"Both parties are focussed on achieving synergies in the
areas of rapidly growing emerging markets as well as in the
development and manufacturing of innovative and environment
friendly compact cars," Suzuki said in a statement.
"...even with existing gasoline and diesel powered cars,
it is necessary to improve engines and make the automobile
frames lighter to improve fuel efficiency and decrease the
output of carbon dioxide," it added.
It also said that new low-cost automobiles that undercut
previous market prices are being introduced for emerging
markets, making it necessary to reduce costs.
Suzuki said the transaction will involve transfer of
around 108 million ordinary shares to Volkswagen and the deal
is expected to be finalised next month.
"The closing of the transaction is subject to approval of
the relevant authorities and is expected in January 2010,"
Suzuki said, adding, "Suzuki intends to invest up to one half
of the amount received from Volkswagen into shares of
Volkswagen."
PTI
First Published: Wednesday, December 09, 2009, 15:19