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

Sun Aug 30, 2015 9:25pm EDT
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By Minami Funakoshi and Ritsuko Ando

TOKYO (Reuters) - Japan's Suzuki Motor Corp (7269.T: Quote) said on Sunday it would buy back the 19.9 percent stake it sold to Volkswagen AG (VOWG_p.DE: Quote) after an international arbitration court ordered the German automaker to sell its holding.

Their planned partnership soured with Japanese automaker accusing VW of seeking to control it and filing for arbitration in November 2011. VW's stake, acquired in January 2010 for 1.7 billion euros ($1.9 billion), 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.

The Japanese automaker's shares climbed as much as 4.6 percent early on Monday, before trading flat. That still outperformed a 1.2 percent decline in the benchmark Nikkei average .N225.

"While we believe investors might react favorably to news of the share buyback, we basically think all of this is already priced in," JPMorgan analyst Akira Kishimoto wrote in a report.

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."   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