Suzuki Motor says it will buy back VW stake as court settles feud

Sun Aug 30, 2015 1:17pm EDT
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By Minami Funakoshi and Ritsuko Ando

TOKYO (Reuters) - 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 (7269.T: Quote) filed for international arbitration in November 2011, after Volkswagen (VOWG_p.DE: Quote) refused to sell back the shares in Suzuki it acquired in January 2010 for 1.7 billion euros ($1.90 billion).

The stake was worth some $3.8 billion at Friday's closing price.

Both companies said they welcomed the clarity offered by the ruling from the International Court of Arbitration of the International Chamber of Commerce, which partially upheld the German company's counterclaims of breach of contract.

"It used to feel as if a small bone were stuck in my throat," Suzuki Chairman and Chief Executive Osamu Suzuki told a news conference. "I feel so refreshed now."

Suzuki said it foresees no impact on its full-year earnings.

VW said in a statement it would not know the impact on its balance sheet or profits until it has coordinated the sale of the Suzuki shares. "We have already retained an investment bank and will in the next few days consult with the bank and our lawyers over the next steps to be taken."

U.S. hedge fund mogul Daniel Loeb urged Suzuki to cancel the shares it buys back, saying the Japanese automaker has enough cash on hand and should avoid issuing equity which would hurt existing shareholders.   Continued...

A view shows the logo of a Suzuki truck for sale at a Suzuki dealership in National City, California November 6, 2012. REUTERS/Mike Blake