Volkswagen AG will sell a Suzuki Motor Corp. stake valued at about ¥463 billion ($3.8 billion) back to the Japanese carmaker following a decision from arbitrators that ended a four-year dispute over a failed partnership.
VW will sell its 19.9 percent holding to Suzuki after the arbitrators upheld the Japanese automaker’s request to end the cooperation, the companies said in separate statements on Sunday.
The value of the stake, which VW bought from Suzuki in 2010 for ¥222.5 billion, is based on Friday’s closing price.
Suzuki also faces the prospect of having to pay damages after arbitrators ruled the Japanese company breached the agreement. The amount of any penalties would be addressed in a further stage of the arbitration proceedings, Suzuki said. The Hamamatsu, Shizuoka Prefecture-based company said it wouldn’t amend profit forecasts as a result of the ruling.
The end of the dispute provides Suzuki with the opportunity to find a new partner. Toshihiro Suzuki, who succeeded his father Osamu as president of the company on June 30, is pursuing a goal to boost annual revenue to ¥3.7 trillion by March 2020.
“It’s like taking out a tiny bone stuck in my throat — I feel refreshed,” Osamu Suzuki, who is now the chairman, said at a news conference Sunday in Tokyo.
The dispute stemmed from the breakdown of a deal brokered in 2009 by Osamu Suzuki and Ferdinand Piech, who was then VW’s supervisory board chairman. The goal was to cooperate on small, fuel-efficient cars for emerging economies, providing Suzuki with access to technology while giving VW a wider role in the Indian market through Suzuki’s business there.
Relations soured in 2011 after Suzuki agreed to buy diesel engines from Fiat, prompting both companies to charge the other with breaching the accord.
Volkswagen said it expects a “positive effect” on earnings and liquidity from the sale of the shares.
“You don’t remarry someone whom you’ve divorced,” Osamu Suzuki said when asked on Sunday about the possibility of working with VW in the future.