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Two leading global automobiles, Toyota Motor Corporation and Suzuki Motor Corp have entered into a capital tie-up in order to develop and promote a long-term partnership between the two companies.
The companies said in a joint statement midweek that “The execution of the capital alliance agreement is a confirmation and expression of the outcome of sincere and careful discussions between the two companies, and it will serve for building and promoting their future partnership in new fields.”
Toyota plans to acquire 24,000,000 shares of common stock in Suzuki (4.94 per cent ownership of the total number of shares issued by Suzuki as of March 31, 2019 (excluding treasury shares) with a total value of JPY 96 billion) by underwriting the disposition of treasury shares by way of third-party allotment conducted by Suzuki.
Likewise, Suzuki plans to acquire, through purchase in the market, shares in Toyota equivalent to JPY 48 billion.
“These share acquisitions will be implemented after the companies obtain approvals from the foreign competition authorities,” the statement added.
The automakers in 2016 said they were exploring a partnership, citing technological challenges and the need to keep up with consolidation in the global auto industry.
Suzuki, which specializes in affordable compact cars, had been struggling to keep pace with the huge costs of investing in research and development for automated driving functions.
The pair earlier this year announced a tie-up to produce electric vehicles and compact cars for each other to better compete with fast-changing technologies in the global auto industry.