|
Their planned partnership soured with Japanese automaker
accusing VW of seeking to control it and filing for arbitration
in November 2011. VW's stake, acquired in January 2010 for 1.7
billion euros ($1.9 billion), was worth some $3.8 billion at
Friday's closing price.
Both companies said they welcomed the clarity offered by the
ruling from the International Court of Arbitration of the
International Chamber of Commerce, which partially upheld the
German company's counterclaims of breach of contract.
"It used to feel as if a small bone were stuck in my throat,"
Suzuki Chairman and Chief Executive Osamu Suzuki told a news
conference. "I feel so refreshed now."
Suzuki said it foresees no impact on its full-year earnings.
The Japanese automaker's shares climbed as much as 4.6 percent
early on Monday, before trading flat. That still outperformed a
1.2 percent decline in the benchmark Nikkei average <.N225>.
"While we believe investors might react favorably to news of the
share buyback, we basically think all of this is already priced
in," JPMorgan analyst Akira Kishimoto wrote in a report.
VW said in a statement it would not know the impact on its
balance sheet or profits until it has coordinated the sale of
the Suzuki shares. "We have already retained an investment bank
and will in the next few days consult with the bank and our
lawyers over the next steps to be taken."
U.S. hedge fund mogul Daniel Loeb urged Suzuki to cancel the
shares it buys back, saying the automaker has enough cash on
hand and should avoid issuing equity.
Loeb sent Suzuki shares soaring early this month by disclosing
his Third Point LLC fund held a stake. He said at the time the
stock was cheap and that the expected resolution of the VW
dispute would allow it to make better use of its cash.
In a phone call with a small number of media outlets, Loeb said
Suzuki should buy the shares at a price not too far from the
current price.
Suzuki said it expects to buy back its shares at a "reasonable"
price, though it did not elaborate.
Takaki Nakanishi, chief executive of Nakanishi Research
Institute, which specializes in the automotive industry, said it
was "highly likely it will buy back at the Friday closing
price."
"For Suzuki, this isn't that much money," he added. Suzuki had
nearly 1 trillion yen ($8.25 billion) in cash reserves as of the
end of March.
Loeb did not mention other specific measures he expected from
Suzuki but said he saw a cancellation as a "first next step". He
said he would be happy to meet with management to discuss other
"shareholder-friendly steps" to better allocate capital, adding
that he had no plans to sell the shares yet.
"At this valuation we're happy to continue holding," he said.
Third Point has not disclosed the size of its Suzuki stake.
Japanese regulation requires ownership of 5 percent or more to
be declared.
The two automakers agreed to tie up in December 2009, pledging
to cooperate on technology such as hybrid and electric cars and
on expanding in emerging economies. But the alliance soon
faltered. In addition to Suzuki's fears that VW was attempting
to control it, VW objected to Suzuki's purchase of diesel
engines from Fiat.
(Additional reporting by Edward Taylor and Ludwig Burger in
Frankfurt, Maki Shiraki and Chang-Ran Kim in Tokyo; Writing by
William Mallard and Lisa Twaronite; Editing by Richard Borsuk
and Edwina Gibbs)
[© 2015 Thomson Reuters. All rights
reserved.] Copyright 2015 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed. |
|
