After four years of deliberation, London’s International Chamber of Commerce Arbitration Court has decreed that Volkswagen Group must sell its 19.9% shareholding in Suzuki Motor Corporation. This stake was acquired by VW in 2009, to seal an alliance between the two companies which swiftly collapsed into acrimony.
However, the show won’t be over until a certain proverbial fat lady sings, and there’s a strong likelihood that she’ll still be singing a German melody.
Although the ICC tribunal ordered VW to divest the shares to Suzuki, any exit will depend on the latter offering an acceptable price. A Suzuki spokesman has said it is prepared to pay a “reasonable” figure but VW could potentially inflate those numbers beyond the realms of reason if an alternative offer appeared.
In addition, the ICC partially upheld VW’s counterclaim for Suzuki’s unilateral breach of its agreement and indicated that damages due would be addressed at a further stage of the arbitration proceedings. In other words, nothing will happen anyway until that money is on the table.
Hovering over settlement of their dispute is Third Point, a leading US activist-investor hedge fund, which has bought into Suzuki and is now targeting its perceived financial management inadequacies. For more details, see our On the Money column in the September issue of British Dealer News.