VW ordered to sell stake in Suzuki

In a decision announced by the two companies on Sunday, the London Court of International Arbitration ruled that the Volkswagen/Suzuki alliance had been terminated, and ordered VW to dispose of Suzuki shares. It also said Suzuki breached an alliance agreement signed in December 2009.

The agreement between the two companies was based on cooperation on technology such as hybrid and electric cars and on expanding in emerging economies.

But within months Suzuki was accusing VW of withholding hybrid technology it had promised to share. At the same time VW objected to Suzuki's purchase of diesel engines from Italian company Fiat.

Volkswagen said it expected a boost to its earnings as a result of the sale of the Suzuki stake. As of March 31, VW held 111.61 million Suzuki shares.

At close of trade on Friday the shares were valued at roughly $3.8 billion (3.3 billion euros). The German auto giant had paid $1.90 billion for the shares in 2010 to become Suzuki's largest shareholder.

"We welcome the clarity created by this ruling," VW said in a written statement.

Suzuki admitted that it might have to pay damages to VW but the details would be addressed in future arbitrations. It said it planned to buy back its shares sold to Volkswagen.

No deal

Suzuki filed for international arbitration in November 2011 after VW had refused to sell back the shares it acquired in January 2010.

The Japanese car maker had hoped to take advantage of Volkswagen's advanced fuel-efficient technology, while VW was focused on Suzuki's expertise in small cars and its access to the car market in India. Suzuki has since developed new fuel-efficient technologies on its own.

Suzuki owns a 1.5 percent stake in Volkswagen and is to consider what to do with the holding, according to the Japanese company's Vice Chairman Yasuhito Harayam.

The arbitrators ordered Volkwagen to sell its Suzuki shares in a way that was deemed reasonable by Suzuki.

Takaki Nakanishi, chief executive of Nakanishi Research Institute, which specializes in the automotive industry, gave his opinion on the estimated $3.8 billion price tag for the shares: "For Suzuki, this isn't that much money."

jm/jr (Reuters, dpa)