Suzuki Mo­tor to buy back VW stake

The Pak Banker - - COMPANIES/BOSS -

TOKYO: Ja­pan's Suzuki Mo­tor Corp said on Sun­day it will buy back the 19.9 per­cent stake it sold to Volk­swa­gen AG af­ter an in­ter­na­tional ar­bi­tra­tion court set­tled a dis­pute be­tween the au­tomak­ers over their failed part­ner­ship.

Suzuki filed for in­ter­na­tional ar­bi­tra­tion in Novem­ber 2011, af­ter Volk­swa­gen (VOWG_p.DE) re­fused to sell back the shares in Suzuki it ac­quired in Jan­uary 2010 for 1.7 bil­lion eu­ros ($1.90 bil­lion). The Ja­panese car­maker said the In­ter­na­tional Court of Ar­bi­tra­tion of the In­ter­na­tional Cham­ber of Com­merce par­tially up­held the Ger­man com­pany's coun­ter­claims of breach of con­tract and that any dam­ages would be set­tled later.

Suzuki said it fore­sees no im­pact from the set­tle­ment on its full-year earn­ings. "It used to feel as if a small bone were stuck in my throat... I feel so re­freshed now," Suzuki Chair­man and Chief Ex­ec­u­tive Osamu Suzuki said at a press con­fer­ence fol­low­ing the com­pany's an­nounce­ment of the set­tle­ment. In a state­ment, VW said "We welcome the fact that there is now clar­ity. The co­op­er­a­tion be­tween the two com­pa­nies has now been ended."

Ac­cord­ing to Suzuki's cor­po­rate web­site, VW held 111.61 mil­lion Suzuki shares as of March 31, val­ued at about 463 bil­lion yen ($3.81 bil­lion) based on Fri­day's clos­ing price of 4,151.5 yen. Suzuki said it ex­pects to buy back its shares at a "rea­son­able" price, though it did not spec­ify what that price would be. The Ger­man car­maker said it has man­dated an in­vest­ment bank and will take le­gal ad­vice on how to divest its Suzuki share.

Takaki Nakanishi, chief ex­ec­u­tive of Nakanishi Re­search In­sti­tute, which spe­cial­izes in the automotive in­dus­try, said "It seems highly likely it will buy back at the Fri­day clos­ing price." "For Suzuki, this isn't that much money," he added. Suzuki had nearly 1 tril­lion yen in cash re­serves as of the end of March. The two car­mak­ers agreed to tie up in De­cem­ber 2009, pledg­ing to co­op­er­ate on tech­nol­ogy such as hy­brid and elec­tric cars and on ex­pand­ing in emerg­ing economies. But the union soured as Suzuki ac­cused VW of with­hold­ing hy­brid tech­nol­ogy it promised to share. VW, in turn, ob­jected to Suzuki's pur­chase of diesel en­gines from Fiat.

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