Toyota Motor Corporation (“Toyota”) and Suzuki Motor Corporation (“Suzuki”) said today that the two companies entered into an agreement regarding a capital alliance (the “Alliance”), in order to establish and promote a long-term partnership between the two companies for promoting collaboration in new fields, including the field of autonomous driving.” Ultimately this is about saving money and sharing the proceeds. The companies will acquire each other’s shares based on the Alliance.
In the glacial world of Japanese corporations, the two companies began considering business partnership on October 12, 2016, and since then have continued to consider details. On March 20 of this year, the companies announced that they would begin specific considerations in order to engage in joint product development and collaboration in production, in addition to promoting the mutual supply of products, by bringing together Toyota’s strength in electrification technologies and Suzuki’s strength in technologies for compact vehicles.
While the words above are standard corporate speak, the way ahead is littered with roadkill from such supposedly ideal joint ventures.
As AutoInformed readers well know, the automobile business is facing change that is arguably unparalleled in both range and magnitude: Environmental regulations continue to tighten. There are new entries from other industries and diversified mobility businesses. Toyota and Suzuki “intend to achieve sustainable growth, by overcoming new challenges surrounding the automobile sector by building and deepening cooperative relationships in new fields while continuing to be competitors, in addition to strengthening the technologies and products in which each company specializes and their existing business foundations.”
Toyota plans to acquire 24,000,000 shares of common stock in Suzuki (4.94% 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. Suzuki plans to acquire, through purchase in the market, shares in Toyota equivalent to ¥48 billion. Caveat – share acquisitions will be implemented after the companies obtain approvals from the foreign competition authorities.