Mike Stevens | Dec 9, 2009

SUZUKI CEO Osamu Suzuki denied last month that his company was in discussions with Volkswagen. This would however appear to be confounded by reports this week that the German carmaker is preparing to buy a stake of up to 20 percent in Suzuki.

According to Reuters, three sources "with direct knowledge" of the negotiations between Volkswagen and Suzuki have confirmed that a deal worth up to $3.1 billion is in the works.

Reuters quoted one of the sources as saying that Volkswagen's stake could grow into a controlling stake of more than one-third in the future.

"An announcement could come as early as this week," the source said. "This is the first step."

In November, Suzuki CEO Osamu Suzuki said that reports of a deal were nothing more than media speculation.

"There’s a saying that there’s no smoke where there’s no fire, but you’re all creating smoke where there’s no fire in this case," Mr Suzuki said.

"There’s been nothing on this from our side."

Past speculation had grown out of a comment made by Volkswagen CEO Dr Martin Winterkorn, speaking with German publication Manager Magazin, when he said “Suzuki would be an interesting partner because of its competency in small cars”.

Volkswagen is believed to be planning a range of small cars based on its Up! concepts, and is looking at an alliance to help reduce the project’s development costs.

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