Vw wants to keep its stake in Suzuki despite breaking the partnership

Article by Christian A., on October 18, 2011

Amid the ongoing dispute on the partnership pact, Volkswagen AG declared that it doesn’t want to lose its stake in Suzuki Motor Corp. However, Volkswagen declined to give further details, explaining that the talks between the two will be “exclusively conducted internally." Meanwhile, a Suzuki spokesman said that it hasn’t been formally contacted by Volkswagen about the issue.

To demand for access to key German technologies, Suzuki served VW with a notice of breach of contract. Suzuki said that unless VW gives in to its demand within weeks, it would have to sell back its stake and give up the alliance.

In January 2009, VW purchased a 19.9% interest in Suzuki for about 1.7 billion euros ($2.4 billion), making VW its biggest shareholder. In addition, Suzuki got a 1.49% share of VW. Last Friday, Volkswagen said that it’s considering whether to take legal action against Suzuki. VW spokesman Michael Brendel said that the company is “keeping all options open,” including legal action.

The conflict between VW and Suzuki started when VW said in its annual report last March that it may “significantly influence financial and operating policy decisions" at Suzuki.

VW also referred to Suzuki as an "associate." In September, Suzuki chairman and CEO Osamu Suzuki made an offer to purchase the shares that VW holds. In return, it pledged to return its 1.5% stake, valued at $1 billion, to Volkswagen. [source: Autonews]

Topics: vw, suzuki, partnership

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