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Suzuki Volkswagen partnership ends

Suzuki Volkswagen partnership ends

Following international arbitration court ordering Volkswagen to sell its holding, Suzuki Motors confirms buyback of 19.9% stake in Volkswagen.

On December 9, 2009 Suzuki Motors and Volkswagen entered into an agreement for global partnership. Under the terms of the contract, Volkswagen signed a framework agreement for global partnership in 2009 with a 19.9 percent stake purchased for $ 1.9 billion.

Suzuki Volkswagen partnership was to align on various factors which included emerging markets, development and manufacture of environmentally friendly vehicles.

Two years into the contract in 2011 and Suzuki Motors filed for termination of the contract. Volkswagen blamed Suzuki Motors for breach of contract where purchase of diesel engines from Fiat was concerned while Suzuki refuted claims that this was anywhere mentioned in the terms of the contract.

Osamu Suzuki

2nd from Left – Osamu Suzuki, Suzuki Motor Corporation’s Chairman and CEO

A dispute between Suzuki Motors of Japan and Volkswagen over a failed partnership caused Suzuki to file for international arbitration in November 2011. This was due to the fact that Volkswagen refused to sell back shares in Suzuki that it has acquired in January 2010 for 1.7 billion Euros ($1.90 billion).

The London Court of International Arbitration partially upheld the counter claims cited by Volkswagen of breach of contract while any damages thus resulting will be settled later.

Suzuki Motors moved the Arbitration Tribunal urging termination of contract and order Volkswagen to divest shares in Suzuki to Suzuki or a third party appointed by Suzuki.

This brings to an end the Suzuki Volkswagen partnership with Suzuki’s corporate website indicating that Volkswagen held 111.61 million shares of Suzuki as on March 31, 2015 valued at 463 billion yen ($3.81 billion). Suzuki estimated that it will buy back its shares at a “reasonable” price, though the company has not indicated what that price will be.

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About the author

Pearl Daniels

Pearl Daniels

Former freelance writer, Pearl Daniels is in the auto industry since 2011, having established herself as a widely read staff writer since 2013. Her keen eye for industry news, daily need to break down latest events, and quest to not miss a single launch detail, gives you the most refreshing morning news on weekdays.

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