The failed link-up between Suzuki and VW has finally reached its end-game with VW being forced to sell its near 20 percent stake back to Suzuki; in response Suzuki has sold its 1.5 percent stake in VAG to its subsidiary, Porsche, for around $300m, taking Porsche's share in VAG to 52.2 percent of its common stock (32.4 percent of its capital stock).
The link between the two stems from a December 2009 deal that was designed to give Suzuki access to VW’s small diesel engine technology in exchange for an improved platform to exploit revenue potential in India and other Asian markets where Suzuki's automotive interests are well established.
However, the deal started to unravel as early as June 2010, just seven months after the deal was struck, with the dispute spilling into the public domain a year later.
Suzuki blamed VW, claiming that the German car maker was treating them like they were a subsidiary and not a partner, and refusing to deliver on the promised technology share. For their part VW took umbrage at Suzuki continuing to buy small diesels from other manufacturers (including Fiat) - something that the Japanese car maker claimed it was still entitled to do under the terms of the agreement if it so chose or deemed it necessary.
Suzuki served VW with legal notice, accusing it of breaching the terms of their agreement in October 2011 and immediately filed for arbitration. After a protracted legal stalemate, an international arbitration court ordered VW to allow Suzuki to exercise its first right to buy back VW’s shareholding "at a reasonable [market] price" at the end of August this year.
Describing it as feeling like he had a "small bone stuck in the back of his throat", Osamu Suzuki, the 85 year old Chairman, immediately announced their intention to do so; VW stating that the "co-operation between the two companies has now been ended".
Suzuki paid VW some $3.8 bn for the stake two weeks ago (around 120 million shares), sparking a 5 percent rise in Suzuki's share price - despite the fact that VW originally paid Suzuki $1.9bn for the shares when the deal was agreed, and also despite Suzuki taking a considerable hit on its 1.5 percent stake in VW.
Given the present difficulties VW is facing, and the background of family warfare and rival ownership groupings the fact that Suzuki sold its stake to Porsche, allowing the sportscar maker to increase its already controlling stake in VW still further, has not gone unnoticed.
Given the present difficulties that VW is facing, and the background of family warfare and rival ownership groupings, the fact that Suzuki sold its stake to Porsche, allowing the sportscar maker to increase its already controlling stake in VW still further, has not gone unnoticed.
