VW Forced to Sell Their Suzuki Shares

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Summary: The only reasonable solution to the four-year dispute between VW and Suzuki is for VW to sell their Suzuki shares back and move on as if the attempted partnership never happened.

Volkswagen AG and Suzuki Motor Corp attempted a partnership in 2009 but having been fighting over it for the last four years. The International Court of Arbitration of the International Chamber of Commerce advised VW to sell their 19.9 percent of Suzuki as a way to settle the disputes and move on.

  

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Suzuki has been requesting that VW sell their shares since 2011 after a plan to work together on new technology failed. VW has been refusing to sell the shares. Suzuki gave valid notice of termination so VW has no standing to refuse selling the shares.

Suzuki and VW came together to produce more fuel efficient cars but a lack of trust dismantled the efforts. Suzuki claimed VW was withholding important information and VW did not like Suzuki’s deal with Fiat to buy diesel engines.

VW bought the shares for $1.90 billion in 2010 so that they could gain access to the Indian market for small cars which Suzuki was the leader in. The plan was for Suzuki to buy back the shares at a reasonable price. The current price of the stake is valued at $3.8 billion. Suzuki has around 1 trillion yen in cash reserves, approximately $8.24 billion, making whatever the sell price of the shares an affordable price for the Japanese automaker.

The ICC tribunal also found that Suzuki broke the agreement between the companies, allowing Volkswagen to seek damages if they wish.

Source: http://www.bbc.com/news/business-34103944

Photo: ifreepress.com