FRANKFURT (Reuters) - A full takeover of Suzuki Motor (7269.T) by Volkswagen (VOWG_p.DE) is seen as unlikely after the Japanese company sought a divorce from a two-year partnership with Europe’s biggest automaker that was marred by disagreements.
German magazine Der Spiegel cited an unnamed senior manager at VW as saying he did not rule out a full takeover of Suzuki, shortly after two months of squabbling between the two companies came to a head.
“First of all, (Suzuki chairman and CEO) Osamu Suzuki would not want to sell. VW simply won’t be able to take over all of Suzuki against his will,” Commerzbank analyst Daniel Schwarz said.
Suzuki said last week it wanted to end its two-year alliance after the German carmaker accused it of violating the pact by agreeing a diesel engine supply deal with Italy’s Fiat FIA.MI.
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.
Spiegel said that once the alliance had formally ended, VW would no longer need Suzuki’s approval to raise its stake in the Japanese company, but analysts were skeptical.
“I think it is rather unlikely that Volkswagen will go for a hostile takeover of Suzuki,” Macquarie Research analyst Christian Breitsprecher said.
The Volkswagen-Suzuki alliance was billed as a partnership of equals when it was formed in 2009 to bolster VW’s presence in India for small cars, and give Suzuki access to hybrid and diesel technology it could not afford to develop on its own.
Analysts saw the tie-up as VW’s best option to tap the Indian market, where car sales jumped by 30 percent in the last fiscal year, but VW last week put on a brave face, saying it could go it alone on the subcontinent.
Suzuki’s move adds to a growing list of failed alliances in the car industry, the most spectacular of which was Daimler’s (DAIGn.DE) ill-fated tie-up with Chrysler, which it ended four years ago, swallowing a $30 billion loss.
“Generally speaking, there are very rare instances of auto alliances being successful unless one side buys a considerable equity stake in the other,” Commerzbank’s Schwarz said.
Theoretically, it would make sense for VW to increase its stake in Suzuki, he said, but after relations between the two companies soured that possibility is dim at best.
Editing by Helen Massy-Beresford