TOKYO—Suzuki Motor Corp. said Monday that it was taking steps to
lift its "corporate value" after New York hedge fund Third Point
LLC disclosed a stake in the auto maker.
It was the latest of several recent investments in Japanese
companies by Third Point, which hopes to profit from a push by the
government of Prime Minister Shinzo Abe to increase shareholder
returns after years of lackluster results.
Suzuki shares jumped as much as 4.7% in Monday trading, hitting
a record high, before closing up 3.4%. The benchmark Nikkei Stock
Average fell 0.2%.
At a news conference to detail its latest quarterly earnings,
Suzuki made no firm commitments, aside from saying it planned to
keep its dividend payout at 15% of net income—a level that is below
that of Toyota Motor Corp. and other big Japanese auto makers.
"We have intended to boost our corporate value, based on our
midterm plan," which was disclosed in June, said Masahiko Nagao, a
managing director. "We want to express our thinking through
dialogues on many occasions."
In a quarterly letter to investors dated July 31, Third Point,
which is headed by chief executive Daniel Loeb, said Suzuki is
undervalued, considering its dominance in the Indian auto market.
Third Point praised Suzuki's low-cost manufacturing model and said
it saw potential for share price gains in the expected resolution
of a dispute with Volkswagen AG.
Suzuki, which has been embroiled in a four-year arbitration
process with Volkswagen over a partnership that soured, has enough
cash to buy back the 19.9% stake that Volkswagen holds, Third Point
said. Alternatively, it could find a way to work together with
Volkswagen and other minority shareholders to improve returns, the
fund said.
A London-based arbitration court is reviewing the case, in which
Suzuki wants Volkswagen to sell back the stake, which it acquired
in 2010.
Third Point didn't disclose the size of its stake in Suzuki,
which is Japan's fourth biggest auto maker after Toyota, Nissan
Motor Co. and Honda Motor Co.
Third Point's move underscores Mr. Loeb's sustained interest in
Japan. The fund disclosed a stake in Sony Corp. in 2013 but sold it
the following year. This year, Mr. Loeb turned his attention to
Fanuc Corp., a highly profitable maker of factory equipment, which
took steps to return more of its earnings to shareholders after Mr.
Loeb said he had acquired a stake.
In his latest letter, Mr. Loeb didn't make specific proposals to
Suzuki.
Suzuki was one of the first Japanese auto makers to focus on
emerging markets. A subsidiary, Maruti Suzuki India Ltd., has the
leading market share in India. Suzuki cited strong sales in that
country in posting an 8.3% rise in operating profit in the
April-June quarter.
Suzuki also gets royalties from Maruti Suzuki for allowing the
subsidiary to use technologies that have been developed by Suzuki
in Japan. Suzuki confirmed Monday that the fee is around $500
million a year.
Write to Yoko Kubota at yoko.kubota@wsj.com
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