Suzuki Motor Corp. rose in Tokyo trading after arbitrators told Volkswagen AG to sell its 19.9 percent stake in the Japanese carmaker, ending a four-year dispute over a failed partnership.
Suzuki jumped as much as 4.6 percent to 4,340.5 yen and traded at 4,287.5 yen as of 9:09 a.m. It was the fourth-biggest gain among companies in the benchmark Nikkei 225 Stock Average, which fell 0.8 percent.
VW will sell the holding after the arbitrators upheld Suzuki’s request to end the cooperation, the companies said in separate statements on Sunday. Suzuki said VW has to sell the stake -- valued at about 463 billion yen ($3.8 billion), based on Friday’s closing price -- back to the Japanese carmaker or a party of its choosing, while VW said the buyer hasn’t been decided. The German company said it has hired a bank for the sale and is still analyzing the ruling.
“Suzuki’s price is likely to soar speculatively” until the company officially announces a buyback, Takaki Nakanishi, an analyst at Jefferies Group LLC, said in a report after the ruling. “The situation is slightly complicated as we don’t know yet the timing and the price.”
The end of the dispute provides Suzuki with the opportunity to find a new partner after the pact with VW failed to result in a single joint project. The Japanese carmaker, which specializes in inexpensive cars, is pursuing a goal to boost annual revenue to 3.7 trillion yen by March 2020.
The goal of the partnership was to cooperate on small, fuel-efficient cars for emerging economies, providing Suzuki with access to technology while giving VW a wider role in the Indian market through Suzuki’s business there. Relations soured in 2011 after the Japanese company agreed to buy diesel engines from Fiat. As trust broke down, the companies accused each other of breaching the accord.
Suzuki faces the prospect of having to pay damages after arbitrators ruled the Japanese company breached the agreement. The amount of any penalties would be addressed in a further stage of the arbitration proceedings, Suzuki said. The Hamamatsu-based company said it wouldn’t amend profit forecasts as a result of the ruling.
Volkswagen said it expects a “positive effect” on earnings and liquidity from the sale of the shares.